June 29, 1999
To Shareholders of the following Series of the Exeter Fund:
Flexible Yield Series I, II, and III
Blended Asset Series I
Blended Asset Series II
Defensive Series
Maximum Horizon Series
Tax Managed Series
Dear Shareholder:
Enclosed is a copy of the Semi-Annual Report for each of the above Series of the
Exeter Fund in which you were invested as of April 30, 1999. The reports
include information about the Series performance as well as portfolio listings
as of that date.
Please contact our Fund Services department at 1-800-466-3863 or your Client
Consultant if you have any questions about the Semi-Annual Reports or about the
Fund.
Sincerely,
/S/ Amy J. Willims
Amy J. Williams
Fund Services Manager
EXETER FUND, INC.
FLEXIBLE YIELD SERIES 1
SEMI-ANNUAL REPORT
APRIL 30, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
A few years ago there was a successful beer campaign based on the slogan "it
doesn't get any better than this". Looking back six months, the same could have
been said about the U.S. fixed income markets. At that time, the consensus
forecast for world Gross Domestic Product ("GDP") growth was rather bleak,
inflation pressures were non-existent, and the supply and demand situation, at
least as far as the U.S. bond market was concerned, was as good as it had been
in 30+ years. Unfortunately the financial markets are in a perpetual state of
flux, and what had been a very friendly fixed income environment had turned
decidedly unfriendly by the end of April.
In the early fall, the one "oasis of economic prosperity" was the U.S. However,
even the U.S. was showing signs of strain. GDP growth during the second and
third quarter of 1998 had slowed relative to the preceding quarters.
Nervousness about the state of our trading partner's economies had many
investors concerned about net exports and the degree to which they would act as
a drag on U.S. growth. The Pacific Rim was showing no signs of escaping from
its financial problems, Russia had effectively defaulted on its debts, and Latin
America was beginning to be consumed by what was frequently referred to as the
"Asian contagion". What a difference six months makes. The U.S. economy,
driven by consumer spending and shrugging off a deteriorating trade balance, has
put together two exceptionally strong quarters of economic growth. There have
been nascent signs of growth in some Pacific Rim countries, Russia has stopped
the bleeding, and Latin America has not suffered anywhere near the economic pain
originally anticipated.
As for the inflation environment, what had been a positive six months ago had
turned into a negative by the end of April. Last fall and into the winter,
commodity prices had fallen so far that in many instances they were below their
cost of production. While that helped pull down the rate of inflation at that
time, prices were so low, they had nowhere to go but up -- especially with the
modest improvement in the economies of some of the emerging markets. The fear
at this time is that rising commodity prices will translate into higher
inflation; therefore, interest rates have ratcheted higher.
Some clouds have even started to develop regarding the bond market's supply and
demand dynamics. It is not so much that the story has changed; the U.S. is
still enjoying budget surpluses outside of Social Security in the neighborhood
of $100 billion. Unfortunately, the trend of increasingly higher surplus
predictions appears to have ended at the same time that the U.S. defense
spending is picking up due to NATO's actions in Kosovo. Granted the
expenditures have been a small percentage of our total defense budget, but it is
concern nonetheless, and a concern that did not exist six months ago.
With the change in the fixed income environment, interest rates moved higher,
especially on bonds with maturities in the 2 to 10 year range. Rates on
short-term bonds were relatively stable, up about 20 basis points (0.20%). As
one moved toward longer-term bonds, the rate increases grew. One-year bills saw
their interest rates rise by about 60 basis points (0.60%), two year note yields
were up just under 95 basis points (0.95%), and five year note yields were up a
touch more than that. Among longer-term bonds, 10-year bond yields rose by
about 75 basis points (0.75%), and thirty-year bond yields were up by about 50
basis points (0.50%). The net effect of these rate increases was a negative
total return in the U.S. Treasury market. The non-U.S. Treasury sectors of the
investment grade market performed better. U.S. agency securities were modestly
positive, corporate bonds returned just under 2%, and mortgages performed the
best, returning about 2.25% for the six-month period ending April 30.
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
The Flexible Yield Series I was not immune from the adverse bond market
environment. Our emphasis on high quality and extended duration has been a
winning strategy in recent years, but did not help over the past six months.
Periods of underperformance will happen as the cyclical factors exert their
influence. Investors should always remember that inflation, and interest rates
for that matter, will never move lower and simply stay there. On the contrary,
there have been, and will continue to be, cyclical pressures that push inflation
and interest rates both higher and lower. However, the non-cyclical factors
that drove inflation lower over the last 15+ years remain in firmly place. As a
result, long-term investment decisions should continue to be based on the
expectation of a benign inflation environment. That means cyclical increases in
inflation and the associated spikes in interest rates may present buying
opportunities. Conversely, significant dips in rates will be viewed as
opportunities to sell. That is the long-term investment perspective that has
driven, and continues to drive, the fixed income investment process at Manning &
Napier.
As always, we appreciate the opportunity to serve you.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow
Effective Maturity - As of 4/30/99:
<TABLE>
<CAPTION>
<S> <C>
Less than 1 Year. 11%
1-2 Years . . . . 20%
2-3 Years . . . . 22%
3-4 Years . . . . 24%
More than 4 Years 23%
</TABLE>
2
<PAGE>
Performance Update as of April 30, 1999 (unaudited)
Exeter Fund, Inc. - Flexible Yield Series 1
<TABLE>
<CAPTION>
Total Return
Growth of $10,000 Average
Through 4/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 10,471 4.71% 4.71%
Five Year . $ 13,134 31.34% 5.60%
Inception 1 $ 12,911 29.11% 5.03%
</TABLE>
Merrill Lynch - U.S. Treasury Short-Term Index
<TABLE>
<CAPTION>
Total Return
Growth of $10,000 Average
Through 4/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 10,592 5.92% 5.92%
Five Year . $ 13,613 36.13% 6.36%
Inception 1 $ 13,460 34.60% 5.87%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Flexible Yield
Series I from its inception (2/15/94) to
present (4/30/99) as compared to the Merrill
Lynch U.S. Treasury Short-Term Index.2
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Merrill Lynch
Flexible Yield U.S. Treasury
Series 1 Short-Term Index
<S> <C> <C>
02/15/94 10,000 10,000
12/31/94 9,924 10,030
12/31/95 10,995 11,133
10/31/96 11,441 11,598
10/31/97 12,025 12,350
10/31/98 12,935 13,302
04/30/99 12,911 13,460
</TABLE>
1 The Series and Index performance are calculated from February 15, 1994, the
Series' inception date. The Series' performance is historical and may not be
indicative of future results.
2 The Merrill Lynch U.S. Treasury Short-Term Index is a market
value weighted measure of approximately 54 U.S. Treasury Securities.
The Index is comprised of U.S. Treasury securities with maturities
greater than one year but less than three years. The Index returns assume
reinvestment of coupons and, unlike Series returns, do not reflect any fees or
expenses.
3
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT/SHARES (NOTE 2)
U.S. TREASURY SECURITIES - 88.06%
<S> <C> <C>
U.S. TREASURY NOTES
U.S.Treasury Note, 6.00%, 6/30/1999. . $ 40,000 $ 40,088
U.S.Treasury Note, 5.625%, 12/31/1999. 20,000 20,100
U.S.Treasury Note, 6.875%, 3/31/2000 . 30,000 30,525
U.S.Treasury Note, 6.75%, 4/30/2000. . 20,000 20,344
U.S.Treasury Note, 4.50%, 9/30/2000. . 150,000 148,875
U.S.Treasury Note, 4.625%, 12/31/2000. 80,000 79,450
U.S.Treasury Note, 6.25%, 4/30/2001. . 15,000 15,328
U.S.Treasury Note, 5.625%, 5/15/2001 . 20,000 20,206
U.S.Treasury Note, 6.625%, 6/30/2001 . 40,000 41,225
U.S.Treasury Note, 6.375%, 9/30/2001 . 50,000 51,391
U.S.Treasury Note, 6.25%, 10/31/2001 . 80,000 82,075
U.S.Treasury Note, 6.125%, 12/31/2001. 65,000 66,564
U.S.Treasury Note, 6.25%, 1/31/2002. . 40,000 41,100
U.S.Treasury Note, 6.25%, 6/30/2002. . 15,000 15,445
U.S.Treasury Note, 6.00%, 7/31/2002. . 40,000 40,900
U.S.Treasury Note, 5.875%, 9/30/2002 . 50,000 50,969
U.S.Treasury Note, 5.625%, 12/31/2002. 140,000 141,663
U.S.Treasury Note, 5.50%, 1/31/2003. . 65,000 65,528
U.S.Treasury Note, 5.50%, 3/31/2003. . 25,000 25,203
U.S.Treasury Note, 5.375%, 6/30/2003 . 175,000 175,656
U.S.Treasury Note, 4.25%, 11/15/2003 . 150,000 144,000
-----------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $1,332,508) 1,316,635
-----------
SHORT-TERM INVESTMENTS - 11.08%
U.S. Treasury Bill, 11/12/99 . . . . . 50,000 48,862
U.S. Treasury Bill, 3/2/2000 . . . . . 50,000 48,087
Dreyfus Treasury Cash Management Fund. 68,682 68,682
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $165,631) 165,631
-----------
TOTAL INVESTMENTS - 99.14%
(Identified Cost $1,498,139) 1,482,266
OTHER ASSETS, LESS LIABILITIES - 0.86% 12,893
-----------
NET ASSETS - 100% $1,495,159
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
FEDERAL TAX INFORMATION:
At April 30, 1999, the net unrealized depreciation based on identified cost for
federal income tax purposes of $ 1,498,139 was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation . . . $ 3,890
Unrealized depreciation . . . (19,763)
----------
UNREALIZED DEPRECIATION - NET ($15,873)
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
APRIL 30, 1999
ASSETS:
Investments, at value (identified cost $1,498,139)(Note 2) $1,482,266
Interest receivable. . . . . . . . . . . . . . . . . . . . 17,691
Receivable from investment advisor (Note 3). . . . . . . . 8,165
-----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . 1,508,122
-----------
LIABILITIES:
Accrued Directors' fees (Note 3) . . . . . . . . . . . . . 3,611
Transfer agent fees payable (Note 3) . . . . . . . . . . . 163
Audit fee payable. . . . . . . . . . . . . . . . . . . . . 3,639
Other payables and accrued expenses. . . . . . . . . . . . 5,550
-----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . 12,963
-----------
NET ASSETS FOR 144,997 SHARES OUTSTANDING. . . . . . . . . $1,495,159
===========
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . $ 1,450
Additional paid-in-capital . . . . . . . . . . . . . . . . 1,502,436
Undistributed net investment income. . . . . . . . . . . . 9,171
Accumulated net realized loss on investments . . . . . . . (2,025)
Net unrealized depreciation on investments . . . . . . . . (15,873)
-----------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . $1,495,159
===========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($1,495,159/144,997 shares). . . . . . . . . . . . . . . . $ 10.31
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED APRIL 30, 1999
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 32,951
---------
EXPENSES:
Management fee (Note 3). . . . . . . . . . . . . . . . . 2,376
Directors' fees (Note 3) . . . . . . . . . . . . . . . . 3,571
Transfer agent fees (Note 3) . . . . . . . . . . . . . . 163
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . 4,853
Custodian fee. . . . . . . . . . . . . . . . . . . . . . 449
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 3,882
---------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 15,294
Less Reduction of Expenses (Note 3). . . . . . . . . . . (10,542)
---------
Net Expenses . . . . . . . . . . . . . . . . . . . . . . 4,752
---------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 28,199
---------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Net realized loss on investments (identified cost basis) (1,181)
Net change in unrealized depreciation on investments . . (29,886)
---------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . (31,067)
---------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . ($2,868)
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the Six
Months Ended For the
4/30/99 Year Ended
(unaudited) 10/31/98
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . $ 28,199 $ 29,614
Net realized gain (loss) on investments . . . . . . . (1,181) 5,788
Net change in unrealized appreciation
(depreciation) on investments. . . . . . . . . . . (29,886) 6,173
-------------- ------------
Net increase (decrease) from operations . . . . . . . (2,868) 41,575
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income. . . . . . . . . . . . . . (27,208) (32,409)
From net realized gain on investments . . . . . . . . (3,806) --
-------------- ------------
Total distributions to shareholders . . . . . . . . . (31,014) (32,409)
-------------- ------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share transactions (Note 5) 385,172 484,871
-------------- ------------
Net increase in net assets. . . . . . . . . . . . . . 351,290 494,037
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . 1,143,869 649,832
-------------- ------------
END OF PERIOD (including undistributed net
investment income of $9,171, and $8,180
respectively) . . . . . . . . . . . . . . . . . . . . $ 1,495,159 $ 1,143,869
============== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
FOR THE
FOR THE SIX PERIOD
MONTHS FOR THE FOR THE FOR THE TEN FOR THE 2/15/94
ENDED YEAR YEAR ENDED MONTHS ENDED YEAR (COMMENCEMENT
4/30/99 ENDED ENDED OF OPERATIONS)
(UNAUDITED) 10/31/98 10/31/97 10/31/96 12/31/95 TO 12/31/94
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD . . $ 10.58 $ 10.39 $ 10.27 $ 10.26 $ 9.69 $ 10.00
------------- ---------- ------------ -------------- ---------- ---------------
Income from investment operations:
Net investment income*. . . . . . . . . 0.204 0.468 0.505 0.411 0.464 0.241
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . (0.224) 0.289 0.099 (0.101) 0.566 (0.317)
------------- ---------- ------------ -------------- ---------- ---------------
Total from investment operations . . . . . (0.020) 0.757 0.604 0.310 1.030 (0.076)
------------- ---------- ------------ -------------- ---------- ---------------
Less distributions to shareholders:
From net investment income. . . . . . . (0.217) (0.567) (0.456) (0.300) (0.460) (0.234)
From net realized gain on investments . (0.033) -- (0.028) -- -- --
------------- ---------- ------------ -------------- ---------- ---------------
Total distributions to shareholders . . (0.250) (0.567) (0.484) (0.300) (0.460) (0.234)
------------- ---------- ------------ -------------- ---------- ---------------
NET ASSET VALUE - END OF PERIOD. . . . . . $ 10.31 $ 10.58 $ 10.39 $ 10.27 $ 10.26 $ 9.69
============= ========== ============ ============== ========== ===============
Total return 1 . . . . . . . . . . . . . . (0.19)% 7.57% 6.07% 3.11% 10.79% (0.76)%
Ratios (to average net assets) /
Supplemental Data:
Expenses*. . . . . . . . . . . . . . . 0.70%2 0.70% 0.70% 0.70%2 0.70% 0.70%2
Net investment income* . . . . . . . . 4.15%2 5.04% 5.29% 5.25%2 4.99% 4.41%2
Portfolio turnover . . . . . . . . . . . . 30% 53% 77% 36% 60% 38%
NET ASSETS - END OF PERIOD
(000's omitted) . . . . . . . . . . . . . $ 1,495 $ 1,144 $ 650 $ 493 $ 256 $ 231
============= ========== ============ ============== ========== ===============
</TABLE>
* The investment advisor did not impose its management fee and paid a portion of
the Series'
expenses. If these expenses had been incurred by the Series, and had 1994,
1995, and 1996 expenses
been limited to that allowed by state securities law, the net investment income
per share and the
ratios would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net investment income . . . . . $ 0.128 $0.116 $0.206 $ 0.270 $0.297 $ 0.143
Ratios (to average net assets):
Expenses. . . . . . . . . . 2.25%2 4.49% 3.83% 2.50%2 2.50% 2.50%2
Net investment income . . . 2.60%2 1.25% 2.16% 3.45%2 3.19% 2.61%2
</TABLE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Flexible Yield Series I (the "Series") is a no-load diversified series of
Exeter Fund, Inc. (the "Fund"). The Fund is organized in Maryland
and is registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
The total authorized capital stock of the Fund consists of one billion shares of
common stock each having a par value of $0.01. As of April 30, 1999, 950
million shares have been designated in total among 19 series, of which 37.5
million have been designated as Flexible Yield Series I Class A Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities listed on an exchange are valued at the latest quoted sales
price of the exchange on which the security is traded most extensively.
Securities not traded on valuation date or securities not listed on an exchange
are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities, will
normally be valued on the basis of evaluated bid prices provided by the Fund's
pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures established by and under the general supervision
and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost,which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made quarterly.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Series.
10
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
DISTRIBUTION OF INCOME AND GAINS (continued)
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a result
of deferral of certain losses, character reclassification between net income and
net gains, or other required tax adjustments. As a result, net investment
income (loss) and net investment gain (loss) on investment transactions for a
reporting period may differ significantly from distributions to shareholders
during such period. As a result, the Series may periodically make
reclassifications among its capital accounts without impacting the Series' net
asset value.
MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST
The Series is authorized to issue five classes of shares (Class A, Class B,
Class, C, Class D, and Class E shares). Currently, only Class A shares have
been issued. The five classes of shares differ in their respective distribution
and service fees. All shareholders bear the common expenses of the Series pro
rata based on the average daily net assets of each class, without distinction
between share classes. Dividends are declared separately for each class. No
class has preferential dividend rights; differences in per share dividend rates
are generally due to differences in separate class expenses.
OTHER
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier Advisors,
Inc. (the "Advisor"), for which the Series pays the Advisor a fee, computed
daily and payable monthly, at an annual rate of 0.35% of the Series' average
daily net assets. The fee amounted to $2,376 for the six months ended April 30,
1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary, pay other
expenses of the Series in order to maintain total expenses for the Series at no
more than 0.70% of average daily net assets each year. Accordingly, the Advisor
did not impose any of its fee and paid expenses amounting to $8,166 for the six
months ended April 30, 1999, which is reflected as a reduction of expenses on
the Statement of Operations. The fee waiver and assumption of expenses by the
Advisor is voluntary and may be terminated at any time.
11
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. For these services, the Series pays a fee which is
calculated as a percentage of the average daily net assets at an annual rate of
0.024%; this fee amounted to $163 for the six months ended April 30, 1999.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
The compensation of the non-affiliated Directors totaled $3,571 for the six
months ended April 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of United States Government securities, other than
short-term securities, were $675,908 and $351,830, respectively, for the six
months ended April 30, 1999.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Flexible Yield Series I Class A Common Stock were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended Ended
4/30/99 10/31/98
------------------- -------------
<S> <C> <C> <C> <C>
Shares Amount Shares Amount
------------------- ----------- ------------- ------------
Sold . . . . 98,527 $1,026,691 139,912 $ 1,458,457
Reinvested . 2,996 31,014 3,160 32,409
Repurchased. (64,652) (672,533) (97,485) (1,005,995)
------------------- ----------- ------------- ------------
Net increase 36,871 $ 385,172 45,587 $ 484,871
=================== =========== ============= ============
</TABLE>
The Advisor owned 13,286 shares on April 30, 1999 and 12,971 shares on October
31, 1998.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing exposure
to various market risks. These financial instruments include written options
and futures contracts and may involve, to a varying degree, elements of risk in
excess of the amounts recognized for financial statement purposes. No such
investments were held by the Series on April 30, 1999.
12
<PAGE>
<PAGE>
Exeter Fund, Inc.
Semi-Annual Report
April 30, 1999
Flexible Yield Series II
<PAGE>
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
A few years ago there was a successful beer campaign based on the slogan "it
doesn't get any better than this". Looking back six months, the same could have
been said about the U.S. fixed income markets. At that time, the consensus
forecast for world Gross Domestic Product ("GDP") growth was rather bleak,
inflation pressures were non-existent, and the supply and demand situation, at
least as far as the U.S. bond market was concerned, was as good as it had been
in 30+ years. Unfortunately the financial markets are in a perpetual state of
flux, and what had been a very friendly fixed income environment had turned
decidedly unfriendly by the end of April.
In the early fall, the one "oasis of economic prosperity" was the U.S. However,
even the U.S. was showing signs of strain. GDP growth during the second and
third quarter of 1998 had slowed relative to the preceding quarters.
Nervousness about the state of our trading partners' economies had many
investors concerned about net exports and the degree to which they would act as
a drag on U.S. growth. The Pacific Rim was showing no signs of escaping from
its financial problems, Russia had effectively defaulted on its debts, and Latin
America was beginning to be consumed by what was frequently referred to as the
"Asian contagion". What a difference six months makes. The U.S. economy,
driven by consumer spending and shrugging off a deteriorating trade balance, has
put together two exceptionally strong quarters of economic growth. There have
been nascent signs of growth in some Pacific Rim countries, Russia has stopped
the bleeding, and Latin America has not suffered anywhere near the economic pain
originally anticipated.
As for the inflation environment, what had been a positive six months ago had
turned into a negative by the end of April. Last fall and into the winter,
commodity prices had fallen so far that in many instances they were below their
cost of production. While that helped pull down the rate of inflation at that
time, prices were so low, they had nowhere to go but up -- especially with the
modest improvement in the economies of some of the emerging markets. The fear
at this time is that rising commodity prices will translate into higher
inflation; therefore, interest rates have ratcheted higher.
Some clouds have even started to develop regarding the bond market's supply and
demand dynamics. It is not so much that the story has changed; the U.S. is
still enjoying budget surpluses outside of Social Security in the neighborhood
of $100 billion. Unfortunately, the trend of increasingly higher surplus
predictions appears to have ended at the same time that the U.S. defense
spending is picking up due to NATO's actions in Kosovo. Granted the
expenditures have been a small percentage of our total defense budget, but it is
concern nonetheless, and a concern that did not exist six months ago.
With the change in the fixed income environment, interest rates moved higher,
especially on bonds with maturities in the 2 to 10 year range. Rates on
short-term bonds were relatively stable, up about 20 basis points (0.20%). As
one moved toward longer-term bonds, the rate increases grew. One-year bills saw
their interest rates rise by about 60 basis points (0.60%), two year note yields
were up just under 95 basis points (0.95%), and five year note yields were up a
touch more than that. Among longer-term bonds, 10-year bond yields rose by
about 75 basis points (0.75%), and thirty-year bond yields were up by about 50
basis points (0.50%). The net effect of these rate increases was a negative
total return in the U.S. Treasury market. The non-U.S. Treasury sectors of the
investment grade market performed better. U.S. agency securities were modestly
positive, corporate bonds returned just under 2%, and mortgages performed the
best, returning about 2.25% for the six-month period ending April 30.
1
<PAGE>
Management Discussion and Analysis (unaudited)
The Flexible Yield Series II was not immune from the adverse bond market
environment. Our emphasis on high quality and extended duration has been a
winning strategy in recent years, but did not help over the past six months.
Periods of underperformance will happen as the cyclical factors exert their
influence. Investors should always remember that inflation, and interest rates
for that matter, will never move lower and simply stay there. On the contrary,
there have been, and will continue to be, cyclical pressures that push inflation
and interest rates both higher and lower. However, the non-cyclical factors
that drove inflation lower over the last 15+ years remain in firmly place. As a
result, long-term investment decisions should continue to be based on the
expectation of a benign inflation environment. That means cyclical increases in
inflation and the associated spikes in interest rates may present buying
opportunities. Conversely, significant dips in rates will be viewed as
opportunities to sell. That is the long-term investment perspective that has
driven, and continues to drive, the fixed income investment process at Manning &
Napier.
As always, we appreciate the opportunity to serve you.
Sincerely,
Exeter Asset Management
Effective Maturity - As of 4/30/99
[graphic]
<pie chart>
Data for pie chart to follow:
<TABLE>
<CAPTION>
<S> <C>
Less than 1 year -. 7%
1-2 years - . . . . 4%
2-3 years - . . . . 26%
3-5 years - . . . . 17%
5-7 years - . . . . 21%
More than 7 years - 25%
</TABLE>
2
<PAGE>
Performance Update as of April 30, 1999 (unaudited)
Exeter Fund, Inc. Flexible Yield Series II
<TABLE>
<CAPTION>
Total Return
Growth of $10,000 Average
Through 4/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 10,579 5.79% 5.79%
Five Year . $ 13,897 38.97% 6.80%
Inception 1 $ 13,286 32.86% 5.61%
</TABLE>
Merrill Lynch Corporate/Government Intermediate Index
<TABLE>
<CAPTION>
Total Return
Growth of $10,000 Average
Through 4/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 10,644 6.44% 6.44%
Five Year . $ 14,194 41.94% 7.25%
Inception 1 $ 13,785 37.85% 6.36%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Flexible Yield
Series II from its inception (2/15/94) to
present (4/30/99) as compared to the Merrill
Lynch Corporate/Government Intermediate
Index. 2
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Merrill Lynch Government/Corporate
Flexible Yield Series II Intermediate Index
<S> <C> <C>
02/15/94 10,000 10,000
12/31/94 9,531 9,799
12/31/95 11,182 11,301
10/31/96 11,336 11,672
10/31/97 12,199 12,560
10/31/98 13,392 13,715
04/30/99 13286 13785
</TABLE>
1 The Series and Index performance are calculated from February 15, 1994, the
Series'
inception date. The Series performance is historical and may not be indicative
of
future results.
2 The Merrill Lynch Corporate/Government Intermediate Index is a market
value weighted measure of approximately 4,800 corporate and government bonds.
The Index is comprised of investment grade bonds with maturities greater than
one
year but less than ten years. The Index returns assume reinvestment of coupons
and, unlike Series returns, do not reflect any fees or expenses.
3
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT/ VALUE
SHARES (NOTE 2)
U.S. TREASURY SECURITIES - 97.58%
<S> <C> <C>
U.S. TREASURY NOTES - 95.36%
U.S. Treasury Note, 6.00%, 6/30/1999. . . . . . . . . . . . . . . . . . $ 20,000 $ 20,044
U.S. Treasury Note, 5.50%, 3/31/2000. . . . . . . . . . . . . . . . . . 20,000 20,106
U.S. Treasury Note, 6.125%, 9/30/2000 . . . . . . . . . . . . . . . . . 25,000 25,359
U.S. Treasury Note, 5.625%, 5/15/2001 . . . . . . . . . . . . . . . . . 55,000 55,567
U.S. Treasury Note, 7.875%, 8/15/2001 . . . . . . . . . . . . . . . . . 30,000 31,763
U.S. Treasury Note, 6.25%, 10/31/2001 . . . . . . . . . . . . . . . . . 25,000 25,649
U.S. Treasury Note, 6.25%, 1/31/2002. . . . . . . . . . . . . . . . . . 50,000 51,375
U.S. Treasury Note, 6.25%, 6/30/2002. . . . . . . . . . . . . . . . . . 45,000 46,336
U.S. Treasury Note, 6.25%, 2/15/2003. . . . . . . . . . . . . . . . . . 40,000 41,350
U.S. Treasury Note, 5.375%, 6/30/2003 . . . . . . . . . . . . . . . . . 20,000 20,075
U.S. Treasury Note, 7.25%, 5/15/2004. . . . . . . . . . . . . . . . . . 100,000 108,531
U.S. Treasury Note, 5.625%, 2/15/2006 . . . . . . . . . . . . . . . . . 25,000 25,328
U.S. Treasury Note, 6.50%, 10/15/2006 . . . . . . . . . . . . . . . . . 75,000 79,922
U.S Treasury Note, 5.625%, 5/15/2008. . . . . . . . . . . . . . . . . . 35,000 35,503
U.S Treasury Note, 4.75%, 11/15/2008. . . . . . . . . . . . . . . . . . 25,000 23,875
---------
TOTAL U.S. TREASURY NOTES
(Identified Cost $586,276) 610,783
---------
U.S. TREASURY STRIPS - 2.22%
Principal only- Interest stripped, 5/15/2009 (Identified Cost $14,313) 25,000 14,225
---------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $600,589) 625,008
---------
SHORT-TERM INVESTMENTS - 1.41%
Dreyfus Treasury Cash Management Fund
(Identified Cost $9,060). . . . . . . . . . . . . . . . . . . . . . . . 9,060 9,060
---------
TOTAL INVESTMENTS - 98.99%
(Identified Cost $609,649) 634,068
OTHER ASSETS, LESS LIABILITIES - 1.01% 6,433
---------
NET ASSETS - 100% $640,501
=========
</TABLE>
FEDERAL TAX INFORMATION:
At April 30, 1999, the net unrealized appreciation based on identified cost for
federal income tax purposes of $609,649 was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation . . . $25,869
Unrealized depreciation . . . (1,450)
--------
UNREALIZED APPRECIATION - NET $24,419
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
APRIL 30, 1999
ASSETS:
Investments, at value (identified cost $609,649)(Note 2) $634,068
Interest receivable. . . . . . . . . . . . . . . . . . . 10,445
Receivable from investment advisor (Note 3). . . . . . . 10,030
--------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . 654,543
--------
LIABILITIES:
Accrued Directors' fees (Note 3) . . . . . . . . . . . . 3,611
Transfer Agent fees payable (Note 3) . . . . . . . . . . 77
Audit fee payable. . . . . . . . . . . . . . . . . . . . 4,052
Other payables and accrued expenses. . . . . . . . . . . 6,302
--------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . 14,042
--------
NET ASSETS FOR 63,797 SHARES OUTSTANDING . . . . . . . . $640,501
========
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . $ 638
Additional paid-in-capital . . . . . . . . . . . . . . . 610,377
Undistributed net investment income. . . . . . . . . . . 4,729
Accumulated net realized gain on investments . . . . . . 338
Net unrealized appreciation on investments . . . . . . . 24,419
--------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . $640,501
========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE ($640,501/63,797 SHARES). . . $ 10.04
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Statement of Operations (unaudited)
For the Six Months Ended April 30, 1999
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 18,873
---------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . . . . 1,452
Directors' fees (Note 3) . . . . . . . . . . . . . . . . 3,571
Transfer Agent fees (Note 3) . . . . . . . . . . . . . . 77
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . 4,738
Custodian fee. . . . . . . . . . . . . . . . . . . . . . 273
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 3,954
---------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 14,065
Less Reduction of Expenses (Note 3). . . . . . . . . . . (11,482)
---------
Net Expenses . . . . . . . . . . . . . . . . . . . . . . 2,583
---------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 16,290
---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments (identified cost basis) 646
Net change in unrealized appreciation on investments . . (21,536)
---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . (20,890)
---------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $ (4,600)
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE SIX
MONTHS ENDED FOR THE
4/30/99 YEAR ENDED
(UNAUDITED) 10/31/98
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . $ 16,290 $ 30,570
Net realized gain on investments . . . . . . . . . . . 646 5,805
Net change in unrealized appreciation
on investments. . . . . . . . . . . . . . . . . . . . (21,536) 18,765
-------------- ------------
Net increase (decrease) from operations. . . . . . . . (4,600) 55,140
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . . (19,368) (31,969)
From net realized gain on investments. . . . . . . . . (5,048) (4,875)
-------------- ------------
Total distributions to shareholders. . . . . . . . . . (24,416) (36,844)
-------------- ------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital
Share transactions (Note 5) . . . . . . . . . . . . (29,812) (37,191)
-------------- ------------
Net decrease in net assets . . . . . . . . . . . . . . (58,828) (18,895)
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . 699,329 718,224
-------------- ------------
END OF PERIOD (including undistributed net investment
Income of $4,729 and $7,807, respectively). . . . . $ 640,501 $ 699,329
============== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE FOR THE FOR THE
SIX MONTHS YEAR YEAR
ENDED ENDED ENDED
4/30/99 10/31/98 10/31/97
(UNAUDITED)
------------ ---------- ---------
Per share data
(for a share outstanding
Throughout Each period):
NET ASSET VALUE -BEGINNING OF PERIOD. . . . . . . . $ 10.50 $ 10.23 $ 10.10
------------ ---------- ----------
Income from investment operations:
Net investment income*. . . . . . . . . . . . . . 0.259 0.575 0.523
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . (0.340) 0.378 0.212
------------ ---------- ----------
Total from investment operations . . . . . . . . . . (0.081) 0.953 0.735
------------ ---------- ----------
Less distributions to shareholders:
From net investment income. . . . . . . . . . . . (0.302) (0.589) (0.597)
From net realized gain on investments . . . . . . (0.077) (0.094) (0.008)
------------ ---------- ----------
Total distributions to shareholders. . . . . . . . . (0.379) (0.683) (0.605)
------------ ---------- ----------
NET ASSET VALUE - END OF PERIOD. . . . . . . . . . . $ 10.04 $ 10.50 $ 10.23
============ ========== ==========
Total return 1 . . . . . . . . . . . . . . . . . . . (0.80%) 9.78% 7.61%
Ratios (to average net assets) / Supplemental Data:
Expenses*. . . . . . . . . . . . . . . . . . . . 0.80%2 0.80% 0.80%
Net investment income* . . . . . . . . . . . . . 5.05%2 5.21% 5.46%
Portfolio turnover . . . . . . . . . . . . . . . . . 15% 31% 58%
NET ASSETS - END OF PERIOD
(000's omitted) . . . . . . . . . . . . . . . . . $ 641 $ 699 $ 718
============ ========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE PERIOD
FOR THE FOR THE 2/15/94
TEN MONTHS YEAR (COMMENCEMENT OF
ENDED ENDED OPERATIONS) TO
10/31/96 12/31/95 12/31/94
------------ ---------- ----------------
Per share data
(for a share outstanding
Throughout Each period):
NET ASSET VALUE -BEGINNING OF PERIOD. . . . . . . . $ 10.30 $ 9.27 $ 10.00
------------ ---------- ----------------
Income from investment operations:
Net investment income*. . . . . . . . . . . . . . 0.445 0.561 0.269
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . (0.315) 1.019 (0.738)
------------ ---------- ----------------
Total from investment operations . . . . . . . . . . 0.130 1.580 (0.469)
------------ ---------- ----------------
Less distributions to shareholders:
From net investment income. . . . . . . . . . . . (0.270) (0.550) (0.261)
From net realized gain on investments . . . . . . (0.060) - -
------------ ---------- ----------------
Total distributions to shareholders. . . . . . . . . (0.330) (0.550) (0.261)
------------ ---------- ----------------
NET ASSET VALUE - END OF PERIOD. . . . . . . . . . . $ 10.10 $ 10.30 $ 9.27
============ ========== ================
Total return 1 . . . . . . . . . . . . . . . . . . . 1.38% 17.33% (4.69%)
Ratios (to average net assets) / Supplemental Data:
Expenses*. . . . . . . . . . . . . . . . . . . . 0.80%2 0.80% 0.80%2
Net investment income* . . . . . . . . . . . . . 5.55%2 5.38% 5.40%2
Portfolio turnover . . . . . . . . . . . . . . . . . 5% 35% 0%
NET ASSETS - END OF PERIOD
(000's omitted) . . . . . . . . . . . . . . . . . $ 481 $ 438 $ 396
============ ========== ================
</TABLE>
*The investment advisor did not impose its management fee and paid a portion of
the Series expenses.
If these expenses had been incurred by the Series, and had 1994, 1995, and
1996, expenses been limited to that allowed by state securities law, the net
investment income per share and the ratios would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net investment income . . . . . $ 0.076 $0.145 $0.243 $ 0.309 $0.384 $ 0.184
Ratios (to average net assets):
Expenses . . . . . . . . . . 4.36%2 4.70% 3.72% 2.50%2 2.50% 2.50%2
Net investment income. . . . 1.49%2 1.31% 2.54% 3.85%2 3.68% 3.70%2
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Flexible Yield Series II (the "Series") is a no-load diversified series of
Exeter Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
The total authorized capital stock of the Fund consists of one billion shares of
common stock each having a par value of $0.01. As of April 30, 1999, 950
million shares have been designated in total among 19 series, of which 37.5
million have been designated as Flexible Yield Series II Class A Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities listed on an exchange are valued at the latest quoted sales
price of the exchange on which the security is traded most extensively.
Securities not traded on valuation date or securities not listed on an exchange
are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities, will
normally be valued on the basis of evaluated bid prices provided by the Fund's
pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures established by and under the general supervision
and responsibility of the Funds Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments, in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
DISTRIBUTION OF INCOME AND GAINS
Distributions to shareholders of net investment income are made quarterly.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Series.
9
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
DISTRIBUTION OF INCOME AND GAINS (continued)
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a result
of deferral of certain losses, or character reclassification between net income
and net gains, or other required tax adjustments. As a result, net investment
income (loss) and net investment gain (loss) on investment transactions for a
reporting period may differ significantly from distributions to shareholders
during such period. As a result, the Series may periodically make
reclassifications among its capital accounts without impacting the Series' net
asset value.
MULTIPLE CLASSES OF SHARES OF COMMON STOCK
The Series is authorized to issue five classes of shares (Class A, Class B,
Class C, Class D, and Class E). Currently, only Class A shares have been
issued. The five classes of shares differ in their respective distribution and
service fees. All shareholders bear the common expenses of the Series pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
OTHER
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier
Advisors, Inc. (the Advisor), for which the Series pays the Advisor a fee,
computed daily and payable monthly, at an annual rate of 0.45% of the Series'
average daily net assets. The fee amounted to $1,452 for the six months ended
April 30, 1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary, pay
other expenses of the Series in order to maintain total expenses for the Series
at no more than 0.80% of average daily net assets each year. Accordingly, the
Advisor did not impose any of its fee and paid expenses amounting to $10,030 for
the six months ended April 30, 1999, which is reflected as a reduction of
expenses on the Statement of Operations. The fee waiver and assumption of
expenses by the Advisor is voluntary and may be terminated at any time.
10
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Series pays a fee which
is calculated as a percentage of the average daily net assets at an annual rate
of 0.024%; this fee amounted to $77 for the six months ended April 30, 1999.
Manning & Napier Investor Services, Inc., a registered broker-dealer
affiliate of the Advisor, acts as distributor for the Fund's shares. The
services of Manning & Napier Investor Services, Inc. are provided at no
additional cost to the Series.
The compensation of the non-affiliated Directors totaled $3,571 for the six
months ended April 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of United States Government securities, other than
short-term securities, were $90,064 and $90,859, respectively, for the six
months ended April 30, 1999.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Flexible Yield Series II Class A Common Stock
were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 4/30/99 Ended 10/31/98
------------------- ----------------
<S> <C> <C> <C> <C>
Shares Amount Shares Amount
------------------- ---------------- -------- ----------
Sold . . . . 5,483 $ 55,351 21,299 $ 218,417
Reinvested . 2,400 24,415 3,668 36,844
Repurchased. (10,695) (109,578) (28,563) (292,452)
------------------- ---------------- -------- ----------
Net decrease (2,812) $ (29,812) (3,596) $ (37,191)
- ------------ =================== ================ ======== ==========
</TABLE>
The Advisor owned 16,312 shares on April 30, 1999 and 15,723 shares on October
31, 1998.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options and
futures contracts and may involve, to a varying degree, elements of risk in
excess of the amounts recognized for financial statement purposes. No such
investments were held by the Series on April 30, 1999.
11
<PAGE>
<PAGE>
Exeter Fund, Inc.
Semi-Annual Report
April 30, 1999
Flexible Yield Series III
<PAGE>
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
A few years ago there was a successful beer campaign based on the slogan "it
doesn't get any better than this". Looking back six months, the same could have
been said about the U.S. fixed income markets. At that time, the consensus
forecast for world Gross Domestic Product ("GDP") growth was rather bleak,
inflation pressures were non-existent, and the supply and demand situation, at
least as far as the U.S. bond market was concerned, was as good as it had been
in 30+ years. Unfortunately the financial markets are in a perpetual state of
flux, and what had been a very friendly fixed income environment had turned
decidedly unfriendly by the end of April.
In the early fall, the one "oasis of economic prosperity" was the U.S. However,
even the U.S. was showing signs of strain. GDP growth during the second and
third quarter of 1998 had slowed relative to the preceding quarters.
Nervousness about the state of our trading partner's economies had many
investors concerned about net exports and the degree to which they would act as
a drag on U.S. growth. The Pacific Rim was showing no signs of escaping from
its financial problems, Russia had effectively defaulted on its debts, and Latin
America was beginning to be consumed by what was frequently referred to as the
"Asian contagion". What a difference six months makes. The U.S. economy,
driven by consumer spending and shrugging off a deteriorating trade balance, has
put together two exceptionally strong quarters of economic growth. There have
been nascent signs of growth in some Pacific Rim countries, Russia has stopped
the bleeding, and Latin America has not suffered anywhere near the economic pain
originally anticipated.
As for the inflation environment, what had been a positive six months ago had
turned into a negative by the end of April. Last fall and into the winter,
commodity prices had fallen so far that in many instances they were below their
cost of production. While that helped pull down the rate of inflation at that
time, prices were so low, they had nowhere to go but up -- especially with the
modest improvement in the economies of some of the emerging markets. The fear
at this time is that rising commodity prices will translate into higher
inflation; therefore, interest rates have ratcheted higher.
Some clouds have even started to develop regarding the bond market's supply and
demand dynamics. It is not so much that the story has changed; the U.S. is
still enjoying budget surpluses outside of Social Security in the neighborhood
of $100 billion. Unfortunately, the trend of increasingly higher surplus
predictions appears to have ended at the same that the U.S. defense spending is
picking up due to NATO's actions in Kosovo. Granted the expenditures have been
a small percentage of our total defense budget, but it is concern nonetheless,
and a concern that did not exist six months ago.
With the change in the fixed income environment, interest rates moved higher,
especially on bonds with maturities in the 2 to 10 year range. Rates on
short-term bonds were relatively stable, up about 20 basis points (0.20%). As
one moved toward longer-term bonds, the rate increases grew. One-year bills saw
their interest rates rise by about 60 basis points (0.60%), two year note yields
were up just under 95 basis points (0.95%), and five year note yields were up a
touch more than that. Among longer-term bonds, 10-year bond yields rose by
about 75 basis points (0.75%), and thirty-year bond yields were up by about 50
basis points (0.50%). The net effect of these rate increases was a negative
total return in the U.S. Treasury market. The non-U.S. Treasury sectors of the
investment grade market performed better. U.S. agency securities were modestly
positive, corporate bonds returned just under 2%, and mortgages performed the
best, returning about 2.25% for the six-month period ending April 30.
1
<PAGE>
Management Discussion and Analysis (unaudited)
The Flexible Yield Series III was not immune from the adverse bond market
environment. Our emphasis on high quality and extended duration has been a
winning strategy in recent years, but did not help over the past six months.
Periods of underperformance will happen as the cyclical factors exert their
influence. Investors should always remember that inflation, and interest rates
for that matter, will never move lower and simply stay there. On the contrary,
there have been, and will continue to be, cyclical pressures that push inflation
and interest rates both higher and lower. However, the non-cyclical factors
that drove inflation lower over the last 15+ years remain in firmly place. As a
result, long-term investment decisions should continue to be based on the
expectation of a benign inflation environment. That means cyclical increases in
inflation and the associated spikes in interest rates may present buying
opportunities. Conversely, significant dips in rates will be viewed as
opportunities to sell. That is the long-term investment perspective that has
driven, and continues to drive, the fixed income investment process at Manning &
Napier.
As always, we appreciate the opportunity to serve you.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow:
Effective Maturity - As of 4/30/99
<TABLE>
<CAPTION>
<S> <C>
Less Than 1 year . 2%
1-2 Years. . . . . 11%
2-3 Years. . . . . 9%
3-5 Years. . . . . 25%
5-7 Years. . . . . 12%
7-10 Years . . . . 15%
More than 10 Years 27%
</TABLE>
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition - As of 4/30/99
<TABLE>
<CAPTION>
<S> <C>
U.S. Treasury Securities . . 79%
Mortgage Backed Securities . 19%
Cash, equivalents, and other
Assets, less liabilities . . 2%
</TABLE>
2
<PAGE>
Performance Update as of April 30, 1999
Exeter Fund, Inc. - Flexible Yield Series III
<TABLE>
<CAPTION>
Total Return
---------------
Growth of $10,000
Through 4/30/99 Investment Cumulative Average Annual
<S> <C> <C> <C>
One Year . $ 10,673 6.73% 6.73%
Five Year. $ 14,712 47.12% 8.02%
Inception1 $ 13,872 38.72% 6.29%
</TABLE>
Merrill Lynch Corporate/Government Bond Index
<TABLE>
<CAPTION>
Total Return
-------------
Growth of $10,000
Through 4/30/99 Investment Cumulative Average Annual
<S> <C> <C> <C>
One Year . . . . $ 10,641 6.41% 6.41%
Five Year. . . . $ 14,690 46.90% 7.99%
Inception1 . . . $ 14,144 41.44% 6.68%
</TABLE>
The value of a $10,000 Investment in the Exeter Fund, Inc. - Flexible Yield
Series III from its inception (10/31/98) to present (4/30/99) as compared to the
Merrill Lynch Corporate/Government Bond Index.2
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Merrill Lynch Corporate/
Date Flexible Yield Series III Government Bond Index
<S> <C> <C>
12/20/93 10,000 10,000
12/31/93 9,960 10,013
12/31/94 9,380 9,686
12/31/95 11,451 11,532
12/31/96 11,431 11,778
10/31/97 12,542 12,832
10/31/98 14,066 14,158
4/30/99. 13,872 14,144
</TABLE>
1 The Series and Index performance are calculated from December 20, 1993, the
Fund's inception date. The Fund's performance is historical and may not be
indicative of future results.
2 The Merrill Lynch Corporate/Government Bond Index is a market value weighted
measure of approximately 6,600 corporate and government bonds. The Index is
comprised of investment grade securities with maturities greater than one year.
The Index returns assume reinvestment of coupons and, unlike Series returns, do
not reflect any fees or expenses.
3
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
U.S. TREASURY SECURITIES - 79.01%
U.S. TREASURY BONDS - 22.29%
U.S. Treasury Bond, 5.625%, 2/15/2006 . . . . $ 70,000 $ 70,919
U.S. Treasury Bond, 6.875%, 8/15/2025 . . . . 155,000 174,617
---------
TOTAL U.S. TREASURY BONDS
(Identified Cost $217,472) 245,536
---------
U.S. TREASURY NOTES - 56.72%
U.S. Treasury Note, 5.50%, 3/31/2000. . . . . 20,000 20,106
U.S. Treasury Note, 6.25%, 8/31/2000. . . . . 30,000 30,469
U.S. Treasury Note, 5.375%, 2/15/2001 . . . . 90,000 90,478
U.S. Treasury Note, 5.625%, 5/15/2001 . . . . 40,000 40,413
U.S. Treasury Note, 6.25%, 6/30/2002. . . . . 50,000 51,484
U.S. Treasury Note, 6.375%, 8/15/2002 . . . . 100,000 103,375
U.S. Treasury Note, 5.875%, 2/15/2004 . . . . 110,000 112,819
U.S. Treasury Note, 6.50%, 8/15/2005. . . . . 55,000 58,283
U.S. Treasury Note, 6.25%, 2/15/2007. . . . . 50,000 52,625
U.S. Treasury Note, 6.625%, 5/15/2007 . . . . 60,000 64,612
---------
TOTAL U.S. TREASURY NOTES
(Identified Cost $598,707) 624,664
---------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $816,179) 870,200
---------
U.S. GOVERNMENT AGENCIES - 19.48%
MORTGAGE BACKED SECURITIES - 10.06%
GNMA, Pool #224199, 9.50%, 7/15/2018. . . . . 5,853 6,308
GNMA, Pool #299164, 9.00%, 12/15/2020 . . . . 7,376 7,873
GNMA, Pool #376345, 9.00%, 10/15/2021 . . . . 64,913 69,278
GNMA, Pool #376345, 6.50%, 12/15/2023 . . . . 27,502 27,345
---------
TOTAL MORTGAGE BACKED SECURITIES
(Identified Cost $107,081) 110,804
---------
OTHER AGENCIES - 9.42%
Federal National Mortgage Association Medium
Term Note, 4.625%, 10/15/2001 . . . . . . . . 55,000 54,136
Federal National Mortgage Association Medium
Term Note, 5.75%, 2/15/2008 . . . . . . . . . 50,000 49,623
---------
TOTAL OTHER AGENCIES
(Identified Cost $107,073) 103,759
---------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $214,154) 214,563
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
SHORT-TERM INVESTMENTS - 0.80%
Dreyfus Treasury Cash Management Fund
(Identified Cost $8,761). . . . . . 8,761 $ 8,761
-----------
TOTAL INVESTMENTS - 99.29%
(Identified Cost $1,039,094) 1,093,524
OTHER ASSETS, LESS LIABILITIES - 0.71% 7,849
-----------
NET ASSETS - 100% $1,101,373
===========
</TABLE>
FEDERAL TAX INFORMATION:
At April 30, 1999, the net unrealized appreciation based on identified cost for
federal income tax purposes of $1,039,094 was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation . . . $57,744
Unrealized depreciation . . . (3,314)
--------
UNREALIZED APPRECIATION - NET $54,430
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Statement of Assets and Liabilities (unaudited)
April 30, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments, at value (identified cost $1,039,094)(Note 2) $1,093,524
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Interest receivable. . . . . . . . . . . . . . . . . . . . 13,845
Receivable from investment advisor (Note 3). . . . . . . . 7,802
----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . 1,115,231
----------
LIABILITIES:
Accrued Directors' fees (Note 3) . . . . . . . . . . . . . 3,611
Transfer Agent fees payable (Note 3) . . . . . . . . . . . 158
Audit fee payable. . . . . . . . . . . . . . . . . . . . . 4,018
Other payables and accrued expenses. . . . . . . . . . . . 6,071
----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . 13,858
----------
NET ASSETS FOR 106,131 SHARES OUTSTANDING. . . . . . . . . $1,101,373
==========
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . $ 1,061
Additional paid-in-capital . . . . . . . . . . . . . . . . 1,004,405
Undistributed net investment income. . . . . . . . . . . . 8,097
Accumulated net realized gain on investments . . . . . . . 33,380
Net unrealized appreciation on investments . . . . . . . . 54,430
----------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . $1,101,373
==========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($1,101,373/106,131 shares) . . . . . . . . . . . . . . $ 10.38
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statement of Operations (unaudited)
For the Six Months Ended April 30, 1999
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 37,842
---------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . . . . 3,292
Directors' fees (Note 3) . . . . . . . . . . . . . . . . 3,571
Transfer Agent fees (Note 3) . . . . . . . . . . . . . . 158
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . 4,747
Registration and filing fees . . . . . . . . . . . . . . 1,732
Custodian fee. . . . . . . . . . . . . . . . . . . . . . 1,056
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 2,135
---------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 16,691
Less Reduction of Expenses (Note 3). . . . . . . . . . . (11,094)
---------
Net Expenses . . . . . . . . . . . . . . . . . . . . . . 5,597
---------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 32,245
---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments (identified cost basis) 33,379
Net change in unrealized appreciation on investments . . (83,463)
---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . (50,084)
---------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $(17,839)
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS FOR THE
ENDED 4/30/99 YEAR ENDED
(UNAUDITED) 10/31/98
--------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . $ 32,245 $ 75,844
Net realized gain on investments . . . . . . . . . . . 33,379 41,155
Net change in unrealized appreciation on investments . (83,463) 51,301
--------------- ------------
Net increase (decrease) from operations. . . . . . . . (17,839) 168,300
--------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . . (40,663) (77,682)
From net realized gain on investments. . . . . . . . . (40,248) (763)
--------------- ------------
Total distributions to shareholders. . . . . . . . . . (80,911) (78,445)
--------------- ------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share
Transactions (Note 5) . . . . . . . . . . . . . . . (548,548) 313,535
--------------- ------------
Net increase (decrease) in net assets. . . . . . . . . (647,298) 403,390
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . 1,748,671 1,345,281
--------------- ------------
END OF PERIOD (including undistributed net investment
income of $8,097 and $16,515, respectively) . . . . $ 1,101,373 $ 1,748,671
=============== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR THE
SIX MONTHS FOR THE FOR THE FOR THE
ENDED YEAR YEAR TEN MONTHS
4/30/99 ENDED ENDED ENDED
(UNAUDITED) 10/31/98 10/31/97 10/31/96
------------ ---------- ---------- ------------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD. . . . . . . $ 11.06 $ 10.41 $ 10.13 $ 10.51
------------ ---------- ---------- ------------
Income from investment operations:
Net investment income*. . . . . . . . . . . . . 0.258 0.531 0.580 0.497
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . (0.403) 0.692 0.355 (0.532)
------------ ---------- ---------- ------------
Total from investment operations . . . . . . . . . (0.145) 1.223 0.935 (0.035)
------------ ---------- ---------- ------------
Less distributions to shareholders:
From net investment income. . . . . . . . . . . (0.286) (0.567) (0.610) (0.345)
From net realized gain on investments . . . . . (0.249) (0.006) (0.045) --
------------ ---------- ---------- ------------
Total distributions to shareholders. . . . . . . . (0.535) (0.573) (0.655) (0.345)
------------ ---------- ---------- ------------
NET ASSET VALUE - END OF PERIOD. . . . . . . . . . $ 10.38 $ 11.06 $ 10.41 $ 10.13
============ ========== ========== ============
Total return 1 . . . . . . . . . . . . . . . . . . (1.37%) 12.15% 9.73% (0.18%)
Ratios (to average net assets)/Supplemental Data:
Expenses*. . . . . . . . . . . . . . . . . . . . . 0.85%2 0.85% 0.85% 0.85%2
Net investment income* . . . . . . . . . . . . . . 4.89%2 5.25% 5.82% 5.98%2
Portfolio turnover . . . . . . . . . . . . . . . . 19% 20% 51% 5%
NET ASSETS - END OF PERIOD (000's omitted) . . . . $ 1,101 $ 1,749 $ 1,345 $ 1,098
============ ========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE PERIOD
FOR THE FOR THE 12/20/93
YEAR YEAR (COMMENCEMENT
ENDED ENDED OF OPERATIONS)
12/31/95 12/31/94 TO 12/31/93
---------- ---------- ----------------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD. . . . . . . $ 9.11 $ 9.95 $ 10.00
---------- ---------- ----------------
Income from investment operations:
Net investment income*. . . . . . . . . . . . . 0.582 0.262 0.010
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . 1.393 (0.841) (0.050)
---------- ---------- ----------------
Total from investment operations . . . . . . . . . 1.975 (0.579) (0.040)
---------- ---------- ----------------
Less distributions to shareholders:
From net investment income. . . . . . . . . . . (0.575) (0.261) (0.010)
From net realized gain on investments . . . . . -- -- --
---------- ---------- ----------------
Total distributions to shareholders. . . . . . . . (0.575) (0.261) (0.010)
---------- ---------- ----------------
NET ASSET VALUE - END OF PERIOD. . . . . . . . . . $ 10.51 $ 9.11 $ 9.95
========== ========== ================
Total return 1 . . . . . . . . . . . . . . . . . . 22.09% (5.83%) (0.40%)
Ratios (to average net assets)/Supplemental Data:
Expenses*. . . . . . . . . . . . . . . . . . . . . 0.85% 0.85% 0.85%2
Net investment income* . . . . . . . . . . . . . . 6.13% 6.22% 3.85%2
Portfolio turnover . . . . . . . . . . . . . . . . 6% 1% 0%
NET ASSETS - END OF PERIOD (000's omitted) . . . . $ 1,159 $ 748 $ 75
========== ========== ================
</TABLE>
*The investment advisor did not impose its management fee and paid a portion of
the Series expenses. If these expenses had been incurred by the Series, and had
1993, 1994 and 1996 expenses been limited to that allowed by state securities
law, the net investment income per share and the ratios would have been as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income. . . . . $ 0.169 $0.379 $0.437 $ 0.360 $0.429 $0.192 $ 0.010
Ratios(to average net assets):
Expenses . . . . . . . . . 2.53%2 2.35% 2.28% 2.50%2 2.46% 2.50% 2.50%2
Net investment income. . . 3.21%2 3.75% 4.39% 4.33%2 4.52% 4.57% 2.20%2
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Flexible Yield Series III (the "Series") is a no-load diversified series of
Exeter Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
The total authorized capital stock of the Fund consists of one billion shares of
common stock each having a par value of $0.01. As of April 30, 1999, 950
million shares have been designated in total among 19 series, of which 37.5
million have been designated as Flexible Yield Series III Class A Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities listed on an exchange are valued at the latest quoted sales
price of the exchange on which the security is traded most extensively.
Securities not traded on valuation date or securities not listed on an exchange
are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities, will
normally be valued on the basis of evaluated bid prices provided by the Fund's
pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures established by and under the general supervision
and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made quarterly.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Series.
10
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
DISTRIBUTIONS OF INCOME AND GAINS (continued)
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a result
of deferral of certain losses, character reclassification between net income and
net gains, or other tax adjustments. As a result, net investment income (loss)
and net investment gain (loss) on investment transactions for a reporting period
may differ significantly from distributions to shareholders during such period.
As a result, the Series may periodically make reclassifications among its
capital accounts without impacting the Series' net asset value.
MULTIPLE CLASSES OF SHARES
The Series is authorized to issue five classes of shares (Class A, Class B,
Class C, Class D, and Class E). Currently, only Class A shares have been
issued. The five classes of shares differ in their respective distribution and
service fees. All shareholders bear the common expenses of the Series pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier Advisors,
Inc. (the "Advisor"), for which the Series pays the Advisor a fee, computed
daily and payable monthly, at an annual rate of 0.50% of the Series' average
daily net assets. The fee amounted to $3,292 for the six months ended April 30,
1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary, pay other
expenses of the Series in order to maintain total expenses for the Series at no
more than 0.85% of average daily net assets each year. Accordingly, the Advisor
did not impose any of its fee and paid expenses amounting to $7,802 for the six
months ended April 30, 1999, which is reflected as a reduction of expenses on
the Statement of Operations. The fee waiver and assumption of expenses by the
Advisor is voluntary and may be terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. For these services, the Series pays a fee which is
calculated as a percentage of the
11
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
average daily net assets at an annual rate of 0.024%; this fee amounted to $158
for the six months ended April 30, 1999.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
The compensation of the non-affiliated Directors totaled $3,571 for the six
months ended April 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of United States Government securities, other than
short-term securities, were $240,626 and $652,260, respectively, for the six
months ended April 30, 1999.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Flexible Yield Series III Class A Common Stock
were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 4/30/99 Ended 10/31/98
------------------- ----------------
Shares Amount Shares Amount
------------------- ---------------- -------- --------------
<S> <C> <C> <C> <C>
Sold . . . . 23,588 $ 258,563 64,913 $ 701,793
Reinvested . 7,397 78,506 6,198 65,259
Repurchased. (82,906) (885,617) (42,333) (453,517)
------------------- ---------------- -------- --------------
Net increase (51,921) $ (548,548) 28,778 $ 313,535
=================== ================ ======== ==============
</TABLE>
The Advisor owned 12,771 shares on April 30, 1999 and 12,153 shares on October
31, 1998.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options and
futures contracts and may involve, to a varying degree, elements of risk in
excess of the amounts recognized for financial statement purposes. No such
investments were held by the Series on April 30, 1999.
12
<PAGE>
<PAGE>
EXETER FUND, INC.
BLENDED ASSET SERIES 1
SEMI-ANNUAL REPORT
APRIL 30, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
In managing the Blended Asset Series I, we put emphasis on reducing volatility.
This approach has led us to maintain a conservative position, with a large
portion of the portfolio invested in fixed income securities. The current
market environment, with market valuations in general at very high levels and
rising interest rates, is a challenging one, but for the six months ending April
30, 1999 the Series has earned a solid absolute return.
One area that has contributed to our performance has been foreign stocks, which
have become an increasing focus for us. An extended period of low performance
in overseas markets provided the opportunity to purchase some undervalued
foreign companies. Investor attitudes are now becoming more favorable toward
the foreign markets, and these stocks have begun to rebound from their low
valuations. We feel they will continue to recover as the low prices they
reached give them plenty of room to improve before they reach normal valuation
levels.
We have also seen some positive signs in oil-related stocks. The price of oil
has moved up significantly, and certain other commodity prices may firm from
their all-time lows. Oil prices have bounced back from lows of $10 per barrel
to around $17 per barrel, and they are expected to remain stable as supply and
demand fundamentals improve. We have attempted to take advantage of this trend
through investments in a few oil-related companies.
In the bond market, interest rates are near their one-year highs as the economy
has been somewhat stronger than expected, thus causing the bond market to be
depressed in the short run. The Advisor considers this period of falling bond
prices and rising yields to be a temporary back-up in the bond market, as we
expect the long-term declining trend of interest rates to resume as cyclical
economic pressures abate.
At a time when market valuations in general are very high, it is important to
discriminate against unwarranted risk and volatility. Recognizing that the
market is overvalued and the bull market is aging, and in keeping with the
Series' goal of balancing growth and volatility concerns, we have continued to
keep the Blended Asset Series I positioned with a conservative stock/bond
allocation. We believe that our current focus on stocks with lower valuations
has positioned the portfolio well for the future.
As always, we appreciate the opportunity to serve you.
Sincerely,
Exeter Asset Management
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
[graphic]
<pie chart>
Data for pie chart to follow
Asset Allocation - As of 4/30/99:
<TABLE>
<CAPTION>
<S> <C>
Bonds. . . . . . . 61%
Stocks . . . . . . 33%
Cash & Equivalents 6%
</TABLE>
2
<PAGE>
Performance Update as of April 30, 1999 (unaudited)
Exeter Fund, Inc. - Blended Asset Series 1
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
04/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 10,591 5.91% 5.91%
Five Year . $ 17,009 70.09% 11.20%
Inception 1 $ 16,569 65.69% 9.39%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Blended
Asset Series I from its inception (9/15/93)
to present (4/30/99) as compared to the
Lehman Brothers Intermediate Bond Index
and a 30-70 Blended Index. 2
Lehman Brothers Intermediate Bond Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
04/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 10,637 6.37% 6.37%
Five Year . $ 14,163 41.63% 7.21%
Inception 1 $ 13,826 38.26% 5.93%
</TABLE>
30 - 70 Blended Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
04/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 11,135 11.35% 11.35%
Five Year . $ 18,194 81.94% 12.71%
Inception 1 $ 18,076 80.76% 11.09%
</TABLE>
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Lehman Brothers 30-70 Blended
Date Blended Asset Series 1 Intermediate Bond Index Index
<S> <C> <C> <C>
09/15/93 10,000 10,000 10,000
12/31/93 10,092 10,032 10,081
12/31/94 10,012 9,838 9,986
12/31/95 12,123 11,347 12,151
10/31/96 12,806 11,728 13,040
10/31/97 14,472 12,606 14,965
10/31/98 15,383 13,755 16,937
04/30/99 16,569 13,826 18,076
</TABLE>
1 Performance numbers for the Series and Indices are calculated from
September 15, 1993, the Series' inception date. The Series' performance is
historical and may not be indicative of future results.
2 The Lehman Brothers Intermediate Bond Index is a market value weighted
measure of approximately 4,800 corporate and government securities. The
Index is comprised of investment grade securities with maturities greater than
one year but less than ten years. The 30-70 Blended Index is 30% Standard &
Poor's
(S&P) 500 Total Return Index and 70% Lehman Brothers Intermediate Bond
Index. The S&P 500 Total Return Index is an unmanaged capitalization-
weighted measure of 500 widely held common stocks listed on the New York
Stock Exchange, American Stocks Exchange, and Over-the-Counter market.
Both Indices' returns assume reinvestment of income and, unlike Series returns,
do not reflect any fees or expenses.
3
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 33.56%
AGRICULTURAL PRODUCTION - 0.04%
Sylvan, Inc.*. . . . . . . . . . . . . . . . . . . . 1,250 $ 13,125
-----------
APPAREL - 0.03%
Novel Denim Holdings Ltd*. . . . . . . . . . . . . . 1,225 9,494
-----------
BUSINESS SERVICES - 1.79%
National Data Corp.
13,325 614,616
------- -----------
CHEMICAL & ALLIED PRODUCTS - 6.84%
BIOLOGICAL PRODUCTS - 1.69%
Cypress Bioscience, Inc.*. . . . . . . . . . . . . 11,000 40,907
Sigma-Aldrich Corp.. . . . . . . . . . . . . . . . 16,575 538,688
579,595
-----------
PHARMACEUTICAL PREPARATIONS - 3.19%
Orion-Yhtyma Oyj - B Shares (Finland) (Note 7) . . 630 12,663
Mylan Laboratories, Inc. . . . . . . . . . . . . . 18,800 426,525
Teva Pharmaceutical Industries Ltd. - ADR (Note 7) 14,300 654,225
1,093,413
-----------
PLASTIC MATERIALS - 1.98%
Eastman Chemical Co. . . . . . . . . . . . . . . . 12,200 679,387
2,352,395
-----------
COMMUNICATIONS - 0.05%
Granite Broadcasting Corp.*. . . . . . . . . . . . . 2,200 16,637
-----------
COMPUTER EQUIPMENT - 0.10%
Bell & Howell Co.* . . . . . . . . . . . . . . . . . 950 31,766
-----------
COMPUTER INTEGRATED SYSTEMS DESIGN - 0.01%
Apache Medical Systems, Inc.*. . . . . . . . . . . . 700 919
-----------
CRUDE PETROLEUM & NATURAL GAS - 4.73%
Gulf Canada Resources Ltd. - ADR* (Note 7) . . . . . 175,700 702,800
-----------
Petroleo Brasileiro S.A. (Petrobras) -
ADR (Note 7). . . . . . . . . . . . . . . . . . . 56,850 918,389
1,621,189
-----------
DIAMONDS - 2.03%
De Beers Consolidated Mines - ADR (Note 7) . . . . . 28,435 696,657
-----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 0.09%
Gold Peak Industries Ltd. (Hong Kong)(Note 7). . . . 48,000 9,475
The Carbide/Graphite Group, Inc.*. . . . . . . . . . 975 12,675
Ultralife Batteries, Inc.* . . . . . . . . . . . . . 2,075 9,597
31,747
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
FOOD & BEVERAGES - 1.89%
Unilever plc - ADR (Note 7). . . . . . . . . . . . . . . . . 18,075 $ 647,311
-----------
GLASS PRODUCTS - 0.04%
Libbey, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 500 15,031
-----------
HEALTH SERVICES - 1.47%
MedPartners, Inc.* . . . . . . . . . . . . . . . . . . . . . 95,994 503,969
-----------
INDUSTRIAL & COMMERCIAL MACHINERY - 0.20%
Comfort Systems USA, Inc.* . . . . . . . . . . . . . . . . . 975 15,356
Hussmann International, Inc. . . . . . . . . . . . . . . . . 1,400 22,225
Lam Research Corp.*. . . . . . . . . . . . . . . . . . . . . 725 22,837
NN Ball & Roller, Inc. . . . . . . . . . . . . . . . . . . . 1,350 9,113
-----------
69,531
-----------
MANAGEMENT SERVICES - 0.02%
Boron, LePore & Associates, Inc.*. . . . . . . . . . . . . . 550 5,637
-----------
PAPER & ALLIED PRODUCTS - 0.17%
Schweitzer-Mauduit International, Inc. . . . . . . . . . . . 1,000 16,563
Smurift-Stone Container Corp.* . . . . . . . . . . . . . . . 1,782 41,654
-----------
58,217
-----------
REFUSE SYSTEMS - 0.04%
Newpark Resources, Inc.* . . . . . . . . . . . . . . . . . . 1,500 13,781
-----------
RETAIL SPECIALTY STORES - 0.02%
Hancock Fabrics, Inc.. . . . . . . . . . . . . . . . . . . . 825 5,208
-----------
TECHNICAL INSTRUMENTS & SUPPLIES - 7.09%
Eastman Kodak Co.. . . . . . . . . . . . . . . . . . . . . . 11,050 824,606
Eclipse Surgical Technologies, Inc.* . . . . . . . . . . . . 1,260 11,261
Millipore Corp.. . . . . . . . . . . . . . . . . . . . . . . 50,750 1,557,391
Orbital Sciences Corp.*. . . . . . . . . . . . . . . . . . . 1,250 26,328
Sola International, Inc.*. . . . . . . . . . . . . . . . . . 825 12,272
-----------
2,431,858
-----------
TELECOMMUNICATION SERVICES - 2.55%
Microcell Telecommunications, Inc. -
ADR* (Note 7) . . . . . . . . . . . . . . . . . . . . . . 3,150 24,413
Telecomunicacoes Brasileiras PFD S.A. (Telebras) -
ADR (Note 7). . . . . . . . . . . . . . . . . . . . . . . 9,295 847,588
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR (Note 7) 9,295 726
-----------
872,727
-----------
TESTING LABORATORIES - 0.04%
Paradigm Geophysical Ltd.* . . . . . . . . . . . . . . . . . 2,350 15,275
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE
AMOUNT/SHARES (NOTE 2)
TEXTILE MILL PRODUCTS - 0.09%
Albany International Corp. - Class A. . . . . . . 1,204 $ 29,197
------------
TRANSPORTATION - 4.23%
RAILROAD - 4.17%
Canadian National Railway Co. - ADR (Note 7) 22,250 1,404,531
Guangshen Railway Co. Ltd. - ADR (Note7). . . . . 3,625 24,242
------------
1,428,773
------------
WATER - 0.06%
Trico Marine Services, Inc.* . . . . . . . . 2,575 20,439
------------
1,449,212
------------
TOTAL COMMON STOCK
(Identified Cost $11,234,789) 11,505,499
------------
U.S. TREASURY SECURITIES - 60.42%
U.S. TREASURY BONDS - 15.24%
U.S. Treasury Bond, 9.875%, 11/15/2015 . . . . $ 20,000 28,331
U.S. Treasury Bond, 7.25%, 5/15/2016. . . . . 45,000 51,441
U.S. Treasury Bond, 8.75%, 5/15/2017 . . . . . 40,000 52,438
U.S. Treasury Bond, 8.75%, 5/15/2020 . . . . . 365,000 487,389
U.S. Treasury Bond, 7.25%, 8/15/2022 . . . . . 390,000 453,741
U.S. Treasury Bond, 7.50%, 11/15/2024. . . . . 3,315,000 3,999,756
U.S. Treasury Bond, 6.875%, 8/15/2025. . . . . 10,000 11,266
U.S. Treasury Bond, 6.50%, 11/15/2026. . . . . 130,000 140,441
------------
TOTAL U.S. TREASURY BONDS
(Identified Cost $4,752,166) 5,224,803
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE
AMOUNT/SHARES (NOTE 2)
U.S. TREASURY NOTES - 45.18%
U.S. Treasury Note, 5.50%, 3/31/2000. . . . . . $ 1,325,000 $ 1,332,040
U.S. Treasury Note, 6.75%, 4/30/2000. . . . . . 80,000 81,375
U.S. Treasury Note, 4.50%, 9/30/2000. . . . . . 1,705,000 1,692,213
U.S. Treasury Note, 4.625%, 12/31/2000. . . . . 135,000 134,072
U.S. Treasury Note, 5.25%, 1/31/2001. . . . . . 20,000 20,063
U.S. Treasury Note, 4.875%, 3/30/2001 . . . . . 1,500,000 1,494,375
U.S. Treasury Note, 6.25%, 4/30/2001. . . . . . 4,295,000 4,388,953
U.S. Treasury Note, 6.625%, 7/31/2001 . . . . . 3,485,000 3,594,997
U.S. Treasury Note, 6.375%, 9/30/2001 . . . . . 20,000 20,556
U.S. Treasury Note, 6.625%, 3/31/2002 . . . . . 10,000 10,384
U.S. Treasury Note, 6.25%, 6/30/2002. . . . . . 185,000 190,492
U.S. Treasury Note, 5.875%, 9/30/2002 . . . . . 1,275,000 1,299,703
U.S. Treasury Note, 5.50%, 3/31/2003. . . . . . 45,000 45,366
U.S. Treasury Note, 5.375%, 6/30/2003 . . . . . 750,000 752,812
U.S. Treasury Note, 4.25%, 11/15/2003 . . . . . 60,000 57,600
U.S. Treasury Note, 6.50%, 5/15/2005. . . . . . 355,000 375,745
------------
TOTAL U.S. TREASURY NOTES
(Identified Cost $15,385,121) 15,490,746
------------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $20,137,287) 20,715,549
------------
U.S. GOVERNMENT AGENCIES - 0.27%
MORTGAGE BACKED SECURITIES
Federal National Mortgage Association Discount
Note, 5.625% 3/15/2001 . . . . . . . . . . . 10,000 10,056
Federal National Mortgage Association Discount
Note, 5.75% 2/15/2008. . . . . . . . . . . . 25,000 24,811
GNMA, Pool #174225, 9.50%, 8/15/2016. . . . . . 890 959
GNMA, Pool #286310, 9.00%, 2/15/2020. . . . . . 17,242 18,402
GNMA, Pool #288873, 9.50%, 8/15/2020. . . . . . 2,739 2,952
GNMA, Pool #385753, 9.00%, 7/15/2024. . . . . . 32,334 34,508
------------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $90,905) 91,688
------------
SHORT-TERM INVESTMENTS - 5.05%
Dreyfus Treasury Cash Management Fund
(Identified Cost $1,884,362). . . . . . . . . . 1,884,362 1,884,362
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
TOTAL INVESTMENTS - 99.75%
(Identified Cost $33,347,343) $34,197,098
OTHER ASSETS, LESS LIABILITIES - 0.25% 87,320
------------
NET ASSETS - 100% $34,284,418
============
</TABLE>
*Non-income producing security
FEDERAL TAX INFORMATION:
At April 30, 1999, the net unrealized appreciation based on identified cost for
federal income tax purposes of $33,347,342 was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation . . . $1,658,780
Unrealized depreciation . . . (809,025)
-----------
UNREALIZED APPRECIATION - NET $ 849,755
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
APRIL 30, 1999
ASSETS:
Investments, at value (identified cost $33,347,343)(Note 2) $34,197,098
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,226
Interest receivable . . . . . . . . . . . . . . . . . . . . 259,374
Dividends receivable. . . . . . . . . . . . . . . . . . . . 59,440
-----------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 34,526,138
-----------
LIABILITIES:
Accrued management fees (Note 3). . . . . . . . . . . . . . 28,226
Accrued Directors' fees (Note 3). . . . . . . . . . . . . . 3,610
Transfer Agent fees payable (Note 3). . . . . . . . . . . . 678
Payable for fund shares repurchased . . . . . . . . . . . . 198,392
Audit fee payable . . . . . . . . . . . . . . . . . . . . . 5,690
Other payables and accrued expenses . . . . . . . . . . . . 5,124
-----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . 241,720
-----------
NET ASSETS FOR 2,968,068 SHARES OUTSTANDING . . . . . . . . $34,284,418
===========
NET ASSETS CONSIST OF:
Capital stock . . . . . . . . . . . . . . . . . . . . . . . $ 29,681
Additional paid-in-capital. . . . . . . . . . . . . . . . . 32,302,901
Undistributed net investment income . . . . . . . . . . . . 375,610
Accumulated net realized gain on investments. . . . . . . . 726,474
Net unrealized appreciation on investments. . . . . . . . . 849,752
-----------
TOTAL NET ASSETS. . . . . . . . . . . . . . . . . . . . . . $34,284,418
===========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($34,284,418/2,968,068 shares) . . . . . . . . . . . . . $ 11.55
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED APRIL 30, 1999
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 594,012
Dividends (net of foreign tax withheld, $2,068). . . . . 109,007
----------
Total Investment Income. . . . . . . . . . . . . . . . . 703,019
----------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . . . . 167,766
Directors' fees (Note 3) . . . . . . . . . . . . . . . . 3,571
Transfer agent fees (Note 3) . . . . . . . . . . . . . . 4,027
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . 7,935
Custodian fee. . . . . . . . . . . . . . . . . . . . . . 6,659
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 10,313
----------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 200,271
----------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 502,748
----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments (identified cost basis) 808,361
Net change in unrealized appreciation on investments . . 1,152,386
----------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . 1,960,747
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $2,463,495
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the Six
Months Ended For the
4/30/99 Year Ended
(unaudited) 10/31/98
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . $ 502,748 $ 916,188
Net realized gain on investments . . . . . . . . . . . 808,361 1,773,717
Net change in unrealized appreciation on investments . 1,152,386 (1,033,391)
-------------- ------------
Net increase from operations . . . . . . . . . . . . . 2,463,495 1,656,514
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . . (630,063) (693,293)
From net realized gain on investments. . . . . . . . . (1,849,031) (1,427,315)
-------------- ------------
Total distributions to shareholders. . . . . . . . . . (2,479,094) (2,120,608)
-------------- ------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share
transactions (Note 5) . . . . . . . . . . . . . . . 2,008,800 10,824,821
-------------- ------------
Net increase in net assets . . . . . . . . . . . . . . 1,993,201 10,360,727
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . 32,291,217 21,930,490
-------------- ------------
END OF PERIOD (including undistributed net investment
income of $375,610 and $502,925, respectively) . . . . $ 34,284,418 $32,291,217
============== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR THE SIX FOR THE
MONTHS FOR THE FOR THE TEN
ENDED YEAR YEAR MONTHS
4/30/99 ENDED ENDED ENDED
(UNAUDITED) 10/31/98 10/31/97 10/31/96
------------- ---------- ---------- ----------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD . . $ 11.59 $ 11.97 $ 11.20 $ 10.72
------------- ---------- ---------- ----------
Income from investment operations:
Net investment income*. . . . . . . . . 0.170 0.357 0.390 0.293
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . 0.670 0.349 1.010 0.307
------------- ---------- ---------- ----------
Total from investment operations . . . . . 0.840 0.706 1.400 0.600
------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income. . . . . . . (0.224) (0.328) (0.442) (0.092)
In excess of net investment income. . . - - - -
From net realized gain on investments . (0.656) (0.758) (0.188) (0.028)
In excess of net realized gain on
investments . . . . . . . . . . . . . . - - - -
------------- ---------- ---------- ----------
Total distributions to shareholders. . . . (0.880) (1.086) (0.630) (0.120)
------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD. . . . . . 11.55 $ 11.59 $ 11.97 $ 11.20
============= ========== ========== ==========
Total return 1 . . . . . . . . . . . . . . 7.71% 6.29% 13.01% 5.64%
Ratios (to average net assets/
Supplemental Data:
Expenses * . . . . . . . . . . . . . . 1.19%2 1.20% 1.20% 1.20%2
Net investment income *. . . . . . . . 3.00%2 3.25% 3.39% 3.69%2
Portfolio turnover . . . . . . . . . . . . 23% 60% 50% 85%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 34,284 $ 32,291 $ 21,930 $ 17,794
============= ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE PERIOD
FOR THE FOR THE 9/15/93
YEAR YEAR (COMMENCEMENT
ENDED ENDED OF OPERATIONS) TO
12/31/95 12/31/94 12/31/93
---------- ---------- -------------------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD . . $ 9.72 $ 10.05 $ 10.00
---------- ---------- -------------------
Income from investment operations:
Net investment income*. . . . . . . . . 0.342 0.200 0.045
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . 1.698 (0.280) 0.045
---------- ---------- -------------------
Total from investment operations . . . . . 2.040 (0.080) 0.090
---------- ---------- -------------------
Less distributions to shareholders:
From net investment income. . . . . . . (0.342) (0.203) (0.040)
In excess of net investment income. . . (0.005) - -
From net realized gain on investments . (0.693) (0.040) -
In excess of net realized gain on
investments . . . . . . . . . . . . . . - (0.007) -
---------- ---------- -------------------
Total distributions to shareholders. . . . (1.040) (0.250) (0.040)
---------- ---------- -------------------
NET ASSET VALUE - END OF PERIOD. . . . . . $ 10.72 $ 9.72 $ 10.05
========== ========== ===================
Total return 1 . . . . . . . . . . . . . . 21.08% (0.80%) 0.93%
Ratios (to average net assets/
Supplemental Data:
Expenses * . . . . . . . . . . . . . . 1.20% 1.20% 1.20%2
Net investment income *. . . . . . . . 3.64% 3.40% 2.47%2
Portfolio turnover . . . . . . . . . . . . 72% 45% 1%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 9,518 $ 4,519 $ 475
========== ========== ===================
</TABLE>
*The investment advisor did not impose all or a portion of its management fee
and in some periods paid a portion of the Series' expenses. If these expenses
had been incurred by the Series, and had 1994 and 1993 expenses been limited to
that allowed by state securities law, the net investment income per share and
the ratios would be as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income N/A $0.354 $0.385 $0.284 $0.311 $0.124 $0.021
Ratios (to average net assets):
Expenses N/A 1.23% 1.24% 1.31%2 1.53% 2.50% 2.50%2
Net investment income N/A 3.22% 3.35% 3.58%2 3.31% 2.10% 1.17%2
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Blended Asset Series I (the "Series") is a no-load diversified series of Exeter
Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company.
The total authorized capital stock of the Fund consists of one billion shares of
common stock each having a par value of $0.01. As of April 30, 1999, 950
million shares have been designated in total among 19 series, of which 37.5
million have been designated as Blended Asset Series I Class A Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities, options and
corporate bonds, listed on an exchange are valued at the latest quoted sales
price of the exchange on which the security is traded most extensively.
Securities not traded on valuation date or securities not listed on an exchange
are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities, will
normally be valued on the basis of evaluated bid prices provided by the Fund's
pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures established by and under the general supervision
and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Serires' policy is to comply with the provisions of the Internal Revenue
Code applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent that the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made semi-annually.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Series.
13
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
DISTRIBUTIONS OF INCOME AND GAINS (continued)
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a result
of deferral of certain losses, foreign denominated investments, character
reclassification between net income and net gains, or other tax adjustments. As
a result, net investment income (loss) and net investment gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Series may
periodically make reclassifications among its capital accounts without impacting
the Series' net asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Series are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis: a)
investment securities, other assets and liabilities are converted to U.S.
dollars based upon current exchange rates; and b) purchases and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange rates is
not separately stated.
MULTIPLE CLASSES OF SHARES OF COMMON STOCK
The Series is authorized to issue five classes of shares (Class A, Class B,
Class C, Class D, and Class E). Currently, only Class A shares have been
issued. The five classes of shares differ in their respective distribution and
service fees. All shareholders bear the common expenses of the Series pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Series has an investment advisory agreement with Manning & Napier
Advisors, Inc. (the "Advisor"), for which the Series pays the Advisor a fee,
computed daily and payable monthly, at an annual rate of 1.0% of the Series'
average daily net assets. The fee amounted to $167,766 for the six months ended
April 30, 1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel
of the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are
14
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
"affiliated persons" of the Fund or of the Advisor, and all personnel of the
Fund or of the Advisor performing services relating to research, statistical and
investment activities are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Series pays a fee which
is calculated as a percentage of the average daily net assets at an annual rate
of 0.024%; this fee amounted to $4,027 for the six months ended April 30, 1999.
Manning & Napier Investor Services, Inc., a registered broker-dealer
affiliate of the Advisor, acts as distributor for the Fund's shares. The
services of Manning & Napier Investor Services, Inc. are provided at no
additional cost to the Fund.
The compensation of the non-affiliated Directors totaled $3,571 for the six
months ended April 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 1999, purchases and sales of securities,
other than United States Government securities and short-term securities, were
$2,803,367 and $7,237,132, respectively. Purchases and sales of United States
Government securities, other than short-term securities, were $4,199,059 and
$134,920, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Blended Asset Series I Class A Common Stock
were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 10/31/99 Ended 10/31/98
------------------- ----------------
Shares Amount Shares Amount
------------------- -------------- ---------- ----------------
<S> <C> <C> <C> <C>
Sold . . . . 520,361 $ 5,834,532 1,438,207 $ 16,430,050
Reinvested . 226,055 2,459,482 187,108 2,098,928
Repurchased. (563,934) (6,285,214) (671,472) (7,704,157)
------------------- -------------- ---------- ----------------
Net increase 182,482 $ 2,008,800 953,843 $ 10,824,821
=================== ============== ========== ================
</TABLE>
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options,
forward foreign currency exchange contracts, and futures contracts and may
involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. No such investments were held by
the Series on April 30, 1999.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of foreign companies and foreign governments
may be less liquid and their prices more volatile than those of securities of
comparable domestic companies and the United States Government.
15
<PAGE>
<PAGE>
Exeter Fund, Inc.
Semi-Annual Report
April 30, 1999
Blended Assets Series II
<PAGE>
Management Discussion and Analysis (unaudited)
Dear Shareholder:
The Blended Asset Series II has a primary objective of providing growth and a
secondary objective of reducing volatility. Because the Series has this goal of
managing volatility, we have shied away from the overvaluation that is seen
throughout the stock market. Instead, we have purchased stocks that our
analysis shows to be at favorable valuations, and we have positioned a
significant portion of the portfolio in bonds. The current market environment,
with market valuations in general at very high levels and rising interest rates,
is a challenging one, but for the six months ending April 30, 1999 the Series
has earned a solid absolute return.
There is still a wide performance gap between the majority of stocks and the
handful of large companies driving the Dow Jones Industrial Average and S&P 500
Index. Indeed, as of April 30th, 1999, 46% of New York Stock Exchange stocks
had actually declined year-to-date. The largest stocks in the US have remained
over-valued and very expensive, with many analysts feeling that their strong run
is ending. Although the momentum-driven rally in these pricey large company
stocks and a handful of Internet-based stocks continued over the last six
months, the Advisor has continued to look elsewhere for buying opportunities.
One area that has contributed to our performance has been foreign stocks, which
have become an increasing focus for us. An extended period of low performance
in overseas markets provided the opportunity to purchase some undervalued
foreign companies. Investor attitudes are now becoming more favorable toward
the foreign markets, and these stocks have begun to rebound from their low
valuations. We feel they will continue to recover as the low prices they
reached give them plenty of room to improve before they reach normal valuation
levels.
Another positive area for us has been oil-related stocks. Oil prices have moved
up significantly, and certain other commodity prices may firm from their
all-time lows. We took advantage of certain buying opportunities in the oil
sector when the prices were low, buying several different oil-related companies.
Oil prices have bounced back from lows of $10 per barrel to around $17 per
barrel, and they are expected to remain stable as supply and demand fundamentals
improve. Rising prices, coupled with the mergers of many of the oil companies,
have led to outstanding performance in this industry. We have sold some of our
holdings in this sector in order to lock in the gains they had earned.
In the bond market, interest rates are near their one-year highs as the economy
has been somewhat stronger than expected, thus causing the bond market to be
depressed in the short run. The Advisor considers this period of falling bond
prices and rising yields to be a temporary back-up in the bond market, as we
expect the long-term declining trend of interest rates to resume as cyclical
economic pressures abate.
At a time when market valuations in general are very high, it is important to
discriminate against unwarranted risk and volatility. Recognizing that the
market is overvalued and the bull market is aging, we have continued to keep the
Blended Asset Series II positioned with a relatively conservative stock/bond
allocation. We believe that our current focus on stocks with lower valuations
has resulted in strong recent performance while positioning the portfolio well
for the future.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
Management Discussion and Analysis (unaudited)
[graphic]
<pie chart>
Data for pie chart to follow:
Asset Allocation - As of 4/30/99
Bonds - 43%
Stocks - 48%
Cash & Equivalents - 9%
2
<PAGE>
Performance Updates as of April 30, 1999 (unaudited)
Exeter Fund, Inc. - Blended Asset Series II
<TABLE>
<CAPTION>
Total Return
-------------
Through 4/30/99 Growth of $10,000 Average
Investment Cumulative Annual
<S> <C> <C> <C>
One Year . . . . . . $ 10,602 6.02% 6.02%
Five Years . . . . . $ 21,190 111.90% 16.20%
Inception1 . . . . . $ 20,770 107.70% 14.70%
</TABLE>
Lehman Brothers Intermediate Bond Index
<TABLE>
<CAPTION>
Total Return
-----------------
Through 4/30/99 Growth of $10,000 Cumulative Average
Investment Annual
<S> <C> <C> <C>
One Year . . . . . . $ 10,637 6.37% 6.37%
Five Years . . . . . $ 14,163 41.63% 7.21%
Inception1 . . . . . $ 13,721 37.21% 5.86%
</TABLE>
Merrill Lynch Corporate/Government Bond Index
<TABLE>
<CAPTION>
Total Return
Through 4/30/99 Growth of $10,000 Average
Investment Cumulative Annual
<S> <C> <C> <C>
One Year . . . . . . $ 10,641 6.41% 6.41%
Five Years . . . . . $ 14,690 46.90% 7.99%
Inception1 . . . . . $ 13,961 39.61% 6.19%
</TABLE>
50-50 Blended Index
<TABLE>
<CAPTION>
Total Return
Through 4/30/99 Growth of $10,000 Average
Investment Cumulative Annual
<S> <C> <C> <C>
One Year . . . . . . $ 11,449 14.49% 14.49%
Five Years . . . . . $ 22,259 122.59% 17.34%
Inception1 . . . . . $ 21,693 116.93% 14.96%
</TABLE>
Exeter Fund, Inc. - Blended Assets Series II from its inception (10/12/93) to
present (4/30/99) as compared to the Lehman Brothers Intermediate Bond Index,
Merrill Lynch Corporate/Government Bond Index and a 50-50 Blended Index.2
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Lehman Brothers Intermediate Merrill Lynch Corporate/
Date Blended Asset Series II Bond Index 50-50 Blended Index Government Bond Index
<S> <C> <C> <C> <C>
10/12/93 $ 10,000 $ 10,000 $ 10,000 $ 10,000
12/31/93 $ 9,982 $ 9,956 $ 10,056 $ 9,883
12/31/94 $ 10,333 $ 9,764 $ 9,978 $ 9,561
12/31/95 $ 13,707 $ 11,261 $ 12,743 $ 11,383
10/31/96 $ 15,078 $ 11,639 $ 13,978 $ 11,625
10/31/97 $ 18,047 $ 12,510 $ 16,832 $ 12,666
10/31/98 $ 17,947 $ 13,651 $ 19,525 $ 13,975
4/30/99. $ 20,770 $ 13,721 $ 21,693 $ 13,961
</TABLE>
1 Performance numbers for the Series and Indices are calculated from October 12,
1993, the Series inception date. The Series performance is historical and may
not be indicative of future results.
2 The Lehman Brothers Intermediate Bond Index is a market value weighted measure
of approximately 4,800 corporate and government securities. The Index is
comprised of investment grade securities with maturities greater than one year
but less than ten years. The 50-50 Blended Index is 50% Standard & Poor's (S&P)
500 Total Return Index and 50% Lehman Brothers Aggregate Bond Index. The S&P500
Total Return Index is an unmanaged capitalization-weighted measure of 500 widely
held common stocks listed on the New York Stock Exchange, American Stock
Exchange, and Over-the-Counter market. The Lehman Brothers Aggregate Bond Index
is a market value weighted measure of approximately 7,400 corporate, government,
and mortgage backed securities. The Index is comprised of investment grade
securities with maturities greater than one year. The Merrill Lynch
Corporate/Government Bond Index is comprised of approximately 6,600 investment
grade corporate and government securities with maturities greater than one year.
The Indices' returns assume reinvestment of income and, unlike Series returns,
do not reflect any fees or expenses.
3
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 48.01%
AGRICULTURAL PRODUCTION - 0.03%
Sylvan, Inc.*. . . . . . . . . . . . . . . . . 2,400 $ 25,200
-----------
APPAREL - 0.02%
Novel Denim Holdings Ltd.* . . . . . . . . . . 2,400 18,600
-----------
BUSINESS SERVICES - 2.87%
National Data Corp.. . . . . . . . . . . . . . 47,050 2,170,181
-----------
CHEMICAL & ALLIED PRODUCTS - 8.34%
BIOLOGICAL PRODUCTS - 2.06%
Cypress Bioscience, Inc.*. . . . . . . . . . . 23,000 85,532
Sigma-Aldrich Corp.. . . . . . . . . . . . . . 45,400 1,475,500
-----------
1,561,032
-----------
PHARMACEUTICAL PREPARATIONS - 3.92%
Mylan Laboratories, Inc. . . . . . . . . . . . 48,600 1,102,612
Orion-Yhtyma Oyi - B Shares (Finland) (Note 7) 2,320 46,632
Teva Pharmaceutical Industries Ltd. - ADR
(Note 7) . . . . . . . . . . . . . . . . . . . 39,650 1,813,987
-----------
2,963,231
-----------
PLASTIC MATERIALS - 2.36%
Eastman Chemical Co. . . . . . . . . . . . . . 32,100 1,787,569
6,311,832
-----------
COMMUNICATIONS - 0.05%
Granite Broadcasting Corp.*. . . . . . . . . . 4,900 37,056
-----------
COMPUTER EQUIPMENT - 0.14%
Bell & Howell Co.* . . . . . . . . . . . . . . 3,275 109,508
-----------
COMPUTER INTEGRATED SYSTEMS DESIGN - 0.02%
Apache Medical Systems, Inc.*. . . . . . . . . 10,550 13,847
-----------
CRUDE PETROLEUM & NATURAL GAS - 9.07%
Apache Corp. . . . . . . . . . . . . . . . . . 22,100 678,194
Burlington Resources, Inc. . . . . . . . . . . 13,700 631,056
Gulf Canada Resources Ltd. - ADR* (Note 7) . . 396,700 1,586,800
Noble Affiliates, Inc. . . . . . . . . . . . . 21,200 679,725
Petroleo Brasileiro S.A. (Petrobras) -
ADR (Note 7). . . . . . . . . . . . . . . . 161,450 2,608,160
Talisman Energy, Inc.* . . . . . . . . . . . . 25,850 686,641
-----------
6,870,576
-----------
DIAMONDS - 3.62%
De Beers Consolidated Mines - ADR (Note 7) . . 111,870 2,740,815
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE
AMOUNT/SHARES (NOTE 2)
DOLLS & STUFFED TOYS - 2.45%
Mattel, Inc.. . . . . . . . . . . . . . . . . 71,650 $1,853,944
-----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 0.09%
Gold Peak Industries Ltd. (Hong Kong)(Note 7). 94,000 18,555
The Carbide/Graphite Group, Inc.*. . . . . . . 1,900 24,700
Ultralife Batteries, Inc.* . . . . . . . . . . 4,700 21,737
64,992
-----------
FOOD & BEVERAGES - 2.70%
Unilever plc - ADR (Note 7). . . . . . . . . . 57,100 2,044,894
-----------
GLASS PRODUCTS - 0.06%
Libbey, Inc.. . . . . . . . . . . . . . . . . 1,400 42,088
-----------
HEALTH SERVICES - 0.68%
MedPartners, Inc.*. . . . . . . . . . . . . . 97,753 513,203
-----------
HOTELS & LODGING PLACES - 0.16%
CDL Hotels International Ltd. - ADR* (Note 7) 29,200 120,564
-----------
INDUSTRIAL & COMMERCIAL MACHINERY - 0.23 %
Comfort Systems USA, Inc.*. . . . . . . . . . 2,400 37,800
Hussmann International, Inc.. . . . . . . . . 3,700 58,738
Lam Research Corp.* . . . . . . . . . . . . . 1,400 44,100
NN Ball & Roller, Inc.. . . . . . . . . . . . 5,425 36,619
-----------
177,257
-----------
MANAGEMENT SERVICES - 0.02%
Boron, LePore & Associates, Inc.* . . . . . . 1,500 15,375
-----------
PAPER & ALLIED PRODUCTS - 2.63%
Asia Pulp & Paper Co. Ltd. - ADR* (Note 7). . 83,900 880,950
Kimberly-Clark Corp.. . . . . . . . . . . . . 16,300 999,394
Schweitzer-Mauduit International, Inc.. . . . 1,850 30,641
Smurfit-Stone Container Corp.*. . . . . . . . 3,564 83,308
-----------
1,994,293
-----------
REFUSE SYSTEMS - 0.04%
Newpark Resources, Inc.*. . . . . . . . . . . 3,400 31,237
-----------
RETAIL SPECIALTY STORES - 0.02%
Hancock Fabrics, Inc. . . . . . . . . . . . . 2,275 14,361
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE
AMOUNT/SHARES (NOTE 2)
TECHNICAL INSTRUMENTS & SUPPLIES - 7.89%
Eastman Kodak Co. . . . . . . . . . . . . . . . 50,425 $ 3,762,966
Eclipse Surgical Technologies Inc.* . . . . . . 2,420 21,629
Millipore Corp. . . . . . . . . . . . . . . . . 68,075 2,089,051
Orbital Sciences Corp.* . . . . . . . . . . . . 3,450 72,666
Sola International, Inc.* . . . . . . . . . . . 1,625 24,172
5,970,484
------------
TELECOMMUNICATION SERVICES -3.12%
Microcell Telecommunications, Inc. - ADR*
(Note 7) . . . . . . . . . . . . . . . . . . 5,300 41,075
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR PFD (Note 7) . . . . . . . . . . . . . 25,465 2,322,090
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR (Note 7). . . . . . . . . . . . . . . . 25,465 1,989
------------
2,365,154
------------
TESTING LABORATORIES - 0.04%
Paradigm Geophysical Ltd.* . . . . . . . . . . . 4,500 29,250
------------
TEXTILE MILL PRODUCTS - 0.08%
Albany International Corp. - Class A. . . . . . 2,393 58,030
------------
TRANSPORTATION - 3.64%
RAILROAD - 3.58%
Canadian National Railway Co. - ADR (Note 7). . 42,150 2,660,719
Guangshen Railway Co. Ltd. - ADR (Note 7) . . . 7,900 52,831
------------
2,713,550
------------
WATER - 0.06%
Trico Marine Services, Inc.*. . . . . . . . . . 5,600 44,450
------------
2,758,000
------------
TOTAL COMMON STOCK
(Identified Cost $34,456,204) 36,350,741
------------
U.S. TREASURY SECURITIES - 42.41%
U.S. TREASURY BONDS - 14.18%
U.S. Treasury Bond, 6.50%, 5/15/2005 . . . . . . $ 105,000 111,136
U.S. Treasury Bond, 7.25%, 8/15/2022 . . . . . . 280,000 325,763
U.S. Treasury Bond, 7.50%, 11/15/2024 . . . . . 2,325,000 2,805,259
U.S. Treasury Bond, 6.875%, 8/15/2025. . . . . . 6,230,000 7,018,487
U.S. Treasury Bond, 6.50%, 11/15/2026. . . . . . 440,000 475,338
------------
TOTAL U.S. TREASURY BONDS
(Identified Cost $9,682,250) 10,735,983
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE
AMOUNT/SHARES (NOTE 2)
U.S. TREASURY NOTES - 28.23%
U.S. Treasury Note, 5.625%, 12/31/2002. . . . . $ 5,845,000 $ 5,914,409
U.S. Treasury Note, 5.50%, 3/31/2003. . . . . . 2,360,000 2,379,175
U.S. Treasury Note, 5.375%, 6/30/2003 . . . . . 130,000 130,488
U.S. Treasury Note, 4.25%, 11/15/2003 . . . . . 9,410,000 9,033,600
U.S. Treasury Note, 4.75%, 2/15/2004. . . . . . 4,000,000 3,920,000
------------
TOTAL U.S. TREASURY NOTES
(Identified Cost $21,517,737) 21,377,672
------------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $31,199,987) 32,113,655
------------
U.S. GOVERNMENT AGENCIES - 0.46%
Federal National Mortgage Association Discount
Note, 5.25%, 1/15/2003 . . . . . . . . . . . 165,000 163,328
Federal National Mortgage Association Discount
Note, 5.75%, 2/15/2008 . . . . . . . . . . . 185,000 183,604
------------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $351,150) 346,932
------------
SHORT-TERM INVESTMENTS - 6.85%
Federal Mortgage Corporation Discount Note
6/04/1999. . . . . . . . . . . . . . . . . . . 2,500,000 2,488,974
Dreyfus Treasury Cash Management Fund . . . . . 2,695,747 2,695,747
------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $5,184,721) 5,184,721
------------
TOTAL INVESTMENTS - 97.73%
(Identified Cost $71,192,062) 73,996,049
OTHER ASSETS, LESS LIABILITIES - 2.27% 1,716,814
------------
NET ASSETS - 100% $75,712,863
============
</TABLE>
*Non-income producing security
FEDERAL TAX INFORMATION:
At April 30, 1999, the net unrealized appreciation based on identified cost for
federal income tax purposes of $71,192,062 was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation . . . $ 5,120,940
Unrealized depreciation . . . (2,316,953
-----------
UNREALIZED APPRECIATION - NET $ 2,803,987
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
APRIL 30, 1999
ASSETS:
Investments, at value (identified cost $71,192,062)(Note 2) $73,996,049
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,322
Receivable for securities sold. . . . . . . . . . . . . . . 899,819
Interest receivable . . . . . . . . . . . . . . . . . . . . 541,577
Receivable for fund shares sold . . . . . . . . . . . . . . 229,383
Dividends receivable. . . . . . . . . . . . . . . . . . . . 181,466
-----------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 75,920,616
-----------
LIABILITIES:
Accrued management fees (Note 3). . . . . . . . . . . . . . 60,432
Accrued Directors' fees (Note 3). . . . . . . . . . . . . . 3,611
Transfer Agent fees payable (Note 3). . . . . . . . . . . . 1,450
Payable for fund shares repurchased . . . . . . . . . . . . 130,368
Audit fees. . . . . . . . . . . . . . . . . . . . . . . . . 2,235
Other payables and accrued expenses . . . . . . . . . . . . 9,657
-----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . 207,753
-----------
NET ASSETS FOR 5,621,125 SHARES OUTSTANDING . . . . . . . . $75,712,863
===========
NET ASSETS CONSIST OF:
Capital stock . . . . . . . . . . . . . . . . . . . . . . . $ 56,211
Additional paid-in-capital. . . . . . . . . . . . . . . . . 69,710,259
Undistributed net investment income . . . . . . . . . . . . 645,772
Accumulated net realized gain on investments. . . . . . . . 2,496,647
Net unrealized appreciation on investments. . . . . . . . . 2,803,974
-----------
TOTAL NET ASSETS. . . . . . . . . . . . . . . . . . . . . . $75,712,863
===========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($75,712,863/5,621,125 shares) . . . . . . . . . . . . . $ 13.47
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED APRIL 30, 1999
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 864,588
Dividends (net of foreign taxes withheld, $3,767). . . . . . . . . . . . . 363,988
-----------
Total Investment Income. . . . . . . . . . . . . . . . . . . . . . . . . . 1,228,576
-----------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . 345,139
Directors' fees (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . 3,571
Transfer Agent fees (Note 3) . . . . . . . . . . . . . . . . . . . . . . . 8,283
Custodian fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,587
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,114
Registration and filing fees . . . . . . . . . . . . . . . . . . . . . . . 6,918
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,361
-----------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391,973
-----------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . 836,603
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments (identified cost basis) and other assets. 2,731,817
Net change in unrealized appreciation on investments and other assets. . . 6,775,560
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS. . . . . . . . . . . . . . 9,507,377
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,343,980
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE SIX MONTHS
ENDED 4/30/99 FOR THE YEAR
(UNAUDITED) ENDED 10/31/98
-------------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . $ 836,603 $ 1,552,087
Net realized gain on investments . . . . . . . . . . . 2,731,817 3,960,798
Net change in unrealized appreciation on investments . 6,775,560 (6,481,268)
-------------------- ----------------
Net increase (decrease) from operations. . . . . . . . 10,343,980 (968,383)
-------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . . (989,517) (1,191,632)
From net realized gain on investments. . . . . . . . . (4,195,323) (6,231,121)
-------------------- ----------------
Total distributions to shareholders. . . . . . . . . . (5,184,840) (7,422,753)
-------------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5). 4,580,701 23,441,792
-------------------- ----------------
Net increase in net assets . . . . . . . . . . . . . . 9,739,841 15,050,656
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . 65,973,022 50,922,366
-------------------- ----------------
END OF PERIOD (including undistributed net investment
income of $645,772 and $798,686, respectively) . . $ 75,712,863 $ 65,973,022
==================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR THE
SIX FOR THE
MONTHS FOR THE FOR THE TEN
ENDED YEAR YEAR MONTHS
4/30/99 ENDED ENDED ENDED
(UNAUDITED) 10/31/98 10/31/97 10/31/96
------------ ---------- ---------- ----------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD. . . $ 12.60 $ 14.69 $ 13.04 $ 11.95
------------ ---------- ---------- ----------
Income from investment operations:
Net investment income . . . . . . . . . 0.150 0.312 0.325 0.227*
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . 1.706 (0.385) 2.130 0.963
------------ ---------- ---------- ----------
Total from investment operations . . . . . 1.856 (0.073) 2.455 1.190
------------ ---------- ---------- ----------
Less distributions to shareholders:
From net investment income. . . . . . . (0.188) (0.286) (0.393) (0.040)
From net realized gain on investments . (0.798) (1.731) (0.412) (0.060)
------------ ---------- ---------- ----------
Total distributions to shareholders. . . . (0.986) (2.017) (0.805) (0.100)
------------ ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD. . . . . . $ 13.47 $ 12.60 $ 14.69 $ 13.04
============ ========== ========== ==========
Total return1. . . . . . . . . . . . . . . 15.73% (0.56%) 19.69% 10.01%
Ratios (to average net assets)
/ Supplemental Data:
Expenses . . . . . . . . . . . . . . . 1.14%2 1.15% 1.15% 1.20%2*
Net investment income. . . . . . . . . 2.44%2 2.45% 2.45% 2.51%2*
Portfolio turnover . . . . . . . . . . . . 47% 61% 63% 57%
NET ASSETS - END OF PERIOD (000's omitted) $ 75,713 $ 65,973 $ 50,922 $ 32,999
============ ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE PERIOD
FOR THE FOR THE 10/12/93
YEAR YEAR (COMMENCEMENT
ENDED ENDED OF OPERATIONS) TO
12/31/95 12/31/94 12/31/93
---------- ---------- -------------------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD. . . $ 10.12 $ 9.98 $ 10.00
---------- ---------- -------------------
Income from investment operations:
Net investment income . . . . . . . . . 0.238* 0.108* 0.014*
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . 3.052 0.243 (0.032)
---------- ---------- -------------------
Total from investment operations . . . . . 3.290 0.351 (0.018)
---------- ---------- -------------------
Less distributions to shareholders:
From net investment income. . . . . . . (0.237) (0.119) (0.002)
From net realized gain on investments . (1.223) (0.092) -
---------- ---------- -------------------
Total distributions to shareholders. . . . (1.460) (0.211) (0.002)
---------- ---------- -------------------
NET ASSET VALUE - END OF PERIOD. . . . . . $ 11.95 $ 10.12 $ 9.98
========== ========== ===================
Total return1. . . . . . . . . . . . . . . 32.64% 3.52% (0.18%)
Ratios (to average net assets)
/ Supplemental Data:
Expenses . . . . . . . . . . . . . . . 1.20%* 1.20%* 1.20%2*
Net investment income. . . . . . . . . 2.53%* 2.12%* 1.94%2*
Portfolio turnover . . . . . . . . . . . . 63% 19% 0%
NET ASSETS - END OF PERIOD (000's omitted) $ 20,519 $ 7,214 $ 475
========== ========== ===================
</TABLE>
*The investment advisor did not impose all or a portion of its management fee
and in some periods paid a portion of the series expenses. If these expenses
had been incurred by the series and had 1993 expenses been limited to that
allowed by state securities law, the net investment income per share and the
ratios would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income . . . . . N/A N/A N/A $ 0.225 $0.226 $0.051 $ 0.005
Ratios (to average net assets):
Expenses . . . . . . . . . . N/A N/A N/A 1.22%2 1.33% 2.31% 2.50%2
Net investment income. . . . N/A N/A N/A 2.49%2 2.40% 1.01% 0.64%2
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Blended Asset Series II (the "Series") is a no-load diversified series of Exeter
Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company.
The total authorized capital stock of the Fund consists of one billion shares of
common stock each having a par value of $0.01. As of April 30, 1999, 950
million shares have been designated in total among 19 series, of which 37.5
million have been designated as Blended Asset Series II Class A Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities, options and
corporate bonds, listed on an exchange are valued at the latest quoted sales
price of the exchange on which the security is traded most extensively.
Securities not traded on valuation date or securities not listed on an exchange
are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities, will
normally be valued on the basis of evaluated bid prices provided by the Fund's
pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures established by and under the general supervision
and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made semi-annually.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Series.
12
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
DISTRIBUTIONS OF INCOME AND GAINS(continued)
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a result
of deferral of certain losses, foreign denominated investments, character
reclassification between net income and net gains, or other tax adjustments. As
a result, net investment income (loss) and net investment gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Series may
periodically make reclassifications among its capital accounts without impacting
the Series' net asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Series are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis: a)
investment securities, other assets and liabilities are converted to U.S.
dollars based upon current exchange rates; and b) purchases and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange rates is
not separately stated.
MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST
The Series is authorized to issue five classes of shares (Class A, Class B,
Class, C, Class D, and Class E shares). Currently, only Class A shares have
been issued. The five classes of shares differ in their respective distribution
and service fees. All shareholders bear the common expenses of the Series pro
rata based on the average daily net assets of each class, without distinction
between share classes. Dividends are declared separately for each class. No
class has preferential dividend rights; differences in per share dividend rates
are generally due to differences in separate class expenses.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier
Advisors, Inc. (the "Advisor"), for which the Series pays the Advisor a fee,
computed daily and payable monthly, at an annual rate of 1.0% of the Series'
average daily net assets. The fee amounted to $345,139 for the six months ended
April 30, 1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and
13
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
bookkeeping services. The salaries of all officers of the Fund and of all
Directors who are "affiliated persons" of the Fund or of the Advisor, and all
personnel of the Fund or of the Advisor performing services relating to
research, statistical and investment activities are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. For these services, the Series pays a fee which is
calculated as a percentage of the average daily net assets at an annual rate of
0.024%; this fee amounted to $8,283 for the six months ended April 30, 1999.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
The compensation of the non-affiliated Directors totaled $3,571 for the six
months ended April 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 1999, purchases and sales of securities,
other than United States Government securities and short-term securities, were
$16,301,321 and $26,594,314, respectively. Purchases and sales of United States
Government securities, other than short-term securities, were $14,724,198 and
$7,266,843, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Blended Asset Series II Class A Common Stock
were:
<TABLE>
<CAPTION>
For the For the
Six Months Ended Year Ended
4/30/99 10/31/98
----------------- -----------
<S> <C> <C> <C> <C>
Shares Amount Shares Amount
----------------- ------------- ----------- -------------
Sold . . . . 1,227,270 $ 15,420,733 2,076,628 $ 27,526,886
Reinvested . 430,682 5,142,339 579,237 7,393,436
Repurchased. (1,271,788) (15,982,371) (887,579) (11,478,530)
----------------- ------------- -----------
Net increase 386,164 $ 4,580,701 1,768,286 $ 23,441,792
================= ============= =========== =============
</TABLE>
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options,
forward foreign currency exchange contracts, and futures contracts and may
involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. No such investments were held by
the Series on April 30, 1999.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of foreign companies and foreign governments
and their markets may be less liquid and their prices more volatile than those
of securities of comparable domestic companies and the United States Government.
14
<PAGE>
<PAGE>
Exeter Fund, Inc.
Semi-Annual Report
April 30, 1999
Defensive Series
<PAGE>
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
The defensive nature of this series dictates that most of the Series will be
invested in bonds. Six months ago, the US fixed income market could not have
looked better. Unfortunately, the financial markets are in a perpetual state of
flux, and what had been a very friendly fixed income environment had turned
decidedly unfriendly by the end of April. The US economy, driven by consumer
spending and shrugging off a deteriorating trade balance, has put together two
exceptionally strong quarters of economic growth. There have been nascent signs
of growth in some Pacific Rim countries, Russia has stopped the bleeding, and
Latin America has not suffered anywhere near the economic pain originally
anticipated. These markets have enjoyed a strong recovery fuelled largely by
increased confidence from foreign investors. As a result, we have seen a
broad-based recovery in the world's stock markets.
As for the inflation environment, what had been a positive six months ago had
turned into a negative by the end of April. Last fall and into the winter,
commodity prices had fallen so far that in many instances they were below their
cost of production. While that helped pull down the rate of inflation at that
time, prices were so low, they had nowhere to go but up - especially with the
modest improvement in the economies of some of the emerging markets. The fear
at this time is that rising commodity prices will translate into higher
inflation; therefore, interest rates have ratcheted higher.
With the change in the fixed income environment, interest rates moved higher,
especially on bonds with maturities in the 2- to 10-year range, and are near
their one-year highs as the economy has been somewhat stronger than expected.
This has caused the bond market to be depressed in the short run, as the net
effect of these rate increases was a negative total return in the US Treasury
market. We consider this period of falling bond prices and rising yields to be
a temporary back-up, as we expect the long-term trend of declining interest
rates to resume as cyclical economic pressures abate.
On the stock side, despite the very strong performance of US stocks in the most
recent six months, there continues to be a wide performance gap between most
stocks and the handful of large companies driving the Dow Jones Industrial
Average and other indices to new highs. For example, year-to-date through April
30th, 46% of stocks listed on the New York Stock Exchange have depreciated. It
has been clear for some time now that the largest cap stocks in the US have
remained over-valued and very expensive, and many analysts feel that their
strong run is ending.
At a time when market valuations in general are very high, it is important to
discriminate against unwarranted risk and volatility. Despite the hostile bond
environment, the Defensive Series managed a positive return, while also avoiding
the overvalued segment of the stock market.
Looking forward, investors should always remember that inflation, and interest
rates for that matter, will never move lower and simply stay there. On the
contrary, there have been, and will continue to be, recurring pressures that
push inflation and interest rates both higher and lower. However, the
non-cyclical factors that drove inflation lower over the last 15+ years remain
in firmly place. As a result, long-term investment decisions should continue to
be based on the expectation of a benign inflation environment. That means
cyclical increases in inflation and the associated spikes in interest rates may
create buying opportunities. Conversely, significant dips in rates may present
opportunities to sell. That is the long-term investment perspective that has
driven, and continues to drive, our fixed income investment process.
As always we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
Management Discussion and Analysis (unaudited)
[graphic]
<pie chart>
Data for pie chart to follow:
Asset Allocation - As of 4/30/99
<TABLE>
<CAPTION>
<S> <C>
Bonds. . . . . . . 78%
Stocks . . . . . . 12%
Cash & Equivalents 10%
</TABLE>
2
<PAGE>
Performance Update as of April 30, 1999 (unaudited)
Exeter Fund, Inc. - Defensive Series
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
04/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 10,473 4.73% 4.73%
Inception 1 $ 12,474 24.74% 6.52%
</TABLE>
Lehman Brothers Intermediate Bond Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
04/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 10,637 6.37% 6.37%
Inception 1 $ 12,474 24.74% 6.52%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Defensive
Series from its inception (11/1/95) to present
(4/30/99) as compared to the Lehman
Brothers Intermediate Bond Index and a
15-85 Blended Index. 2
15-85 Blended Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
04/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 10,889 8.89% 8.89%
Inception 1 $ 13,878 38.78% 9.82%
</TABLE>
[graphic]
<line chart>
Date for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Lehman Brothers Intermediate
Defensive Series Bond Index 15-85 Blended Index
<S> <C> <C> <C>
11/01/95 10,000 10,000 10,000
10/31/96 10,494 10,581 10,847
10/31/97 11,411 11,374 12,052
10/31/98 12,157 12,411 13,398
4/30/99. 12,474 12,474 13,878
</TABLE>
1 Performance numbers for the Series and Indices are calculated from November 1,
1995, the Series' inception date. The Fund's performance is historical and may
not be indicative of future results.
2 The Lehman Brothers Intermediate Bond Index is a market value weighted
measure of approximately 4,800 corporate and government securities. The Index
is comprised of investment grade securities with maturities greater than one
year
but less than ten years. The 15-85 Blended Index is 15% Standard & Poor's
(S&P) 500
Total Return Index and 85% Lehman Brothers Intermediate Bond Index. The S&P
500 Total Return Index is an unmanaged capitalization-weighted measure of 500
widely held common stocks listed on the New York Stock Exchange, American
Stock Exchange, and Over-the-Counter market. Both Indices returns assume
reinvestment of income and, unlike Fund returns, do not reflect any fees or
expenses.
3
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 11.74%
AGRICULTURAL PRODUCTION - 0.01%
Sylvan, Inc.* . . . . . . . . . . . . . . . . . . 75 $ 788
---------
APPAREL - 0.01%
Novel Denim Holdings Ltd.*. . . . . . . . . . . . 75 581
---------
BUSINESS SERVICES - 0.65%
National Data Corp. . . . . . . . . . . . . . . . 875 40,359
---------
CHEMICAL & ALLIED PRODUCTS - 2.42%
BIOLOGICAL PRODUCTS - 0.56%
Cypress Bioscience, Inc.* . . . . . . . . . . . . 600 2,231
Sigma-Aldrich Corp. . . . . . . . . . . . . . . . 1,000 32,500
---------
34,731
---------
PHARMACEUTICAL PREPARATIONS - 1.14%
Mylan Laboratories, Inc.. . . . . . . . . . . . . 1,300 29,494
Teva Pharmaceutical Industries Ltd.- ADR (Note 7) 900 41,175
---------
70,669
---------
PLASTICS MATERIALS - 0.72%
Eastman Chemical Co.. . . . . . . . . . . . . . . 800 44,550
---------
149,950
---------
COMMUNICATIONS - 0.02%
Granite Broadcasting Corp.* . . . . . . . . . . . 125 945
---------
COMPUTER EQUIPMENT - 0.04%
Bell & Howell Co.*. . . . . . . . . . . . . . . . 75 2,508
---------
COMPUTER INTEGRATED SYSTEMS DESIGN - 0.01%
Apache Medical Systems, Inc.* . . . . . . . . . . 300 394
---------
CRUDE PETROLEUM & NATURAL GAS - 1.63%
Gulf Canada Resources Ltd.- ADR* (Note 7) . . . . 12,100 48,400
Petroleo Brasileiro S.A. (Petrobras) -
ADR (Note 7) . . . . . . . . . . . . . . . . . . 3,275 52,906
---------
101,306
---------
DIAMONDS - 0.75%
De Beers Consolidated Mines - ADR (Note 7). . . . 1,900 46,550
---------
ELECTRONICS & ELECTRICAL EQUIPMENT - 0.03%
Gold Peak Industries Ltd. (Hong Kong)(Note 7) . . 3,000 592
The Carbide/Graphite Group, Inc.* . . . . . . . . 50 650
Ultralife Batteries, Inc.*. . . . . . . . . . . . 125 578
---------
1,820
---------
FOOD & BEVERAGES - 0.75%
Unilver plc -ADR (Note 7) . . . . . . . . . . . . 1,300 46,556
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
GLASS PRODUCTS - 0.01%
Libbey, Inc. . . . . . . . . . . . . . . . . . . . 25 $ 752
---------
HEALTH SERVICES - 0.60%
MedPartners, Inc.* . . . . . . . . . . . . . . . . 7,100 37,275
---------
INDUSTRIAL & COMMERCIAL MACHINERY - 0.08%
Comfort Systems USA, Inc.* . . . . . . . . . . . . 50 788
Hussmann International, Inc. . . . . . . . . . . . 100 1,588
Lam Research Corp.*. . . . . . . . . . . . . . . . 50 1,575
NN Ball & Roller, Inc. . . . . . . . . . . . . . . 150 1,013
---------
4,964
---------
MANAGEMENT SERVICES - 0.00%
Boron, LePore & Associates, Inc.*. . . . . . . . . 25 256
---------
PAPER & ALLIED PRODUCTS - 0.05%
Schweitzer-Mauduit International, Inc. . . . . . . 50 828
Smurfit-Stone Container Corp.* . . . . . . . . . . 99 2,314
---------
3,142
---------
REFUSE SYSTEMS - 0.01%
Newpark Resources, Inc.* . . . . . . . . . . . . . 75 689
---------
RETAIL - SPECIALTY STORES - 0.01%
Hancock Fabrics, Inc.. . . . . . . . . . . . . . . 75 473
---------
TECHNICAL INSTRUMENTS & SUPPLIES - 2.37%
Eastman Kodak Co.. . . . . . . . . . . . . . . . . 850 63,431
Eclipse Surgical Technologies, Inc.* . . . . . . . 60 536
Millipore Corp.. . . . . . . . . . . . . . . . . . 2,625 80,555
Orbital Sciences Corp.*. . . . . . . . . . . . . . 75 1,580
Sola International, Inc.*. . . . . . . . . . . . . 50 744
---------
146,846
---------
TELECOMMUNICATION SERVICES- 0.99%
Microcell Telecommunications, Inc. - ADR* (Note 7) 175 1,356
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR* (Note 7) . . . . . . . . . . . . . . . . . . 655 51
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR* PFD (Note 7) . . . . . . . . . . . . . . . . 655 59,728
---------
61,135
---------
TESTING LABORATORIES - 0.01%
Paradigm Geophysical Ltd.* . . . . . . . . . . . . 125 813
---------
TEXTILE MILL PRODUCTS - 0.03%
Albany International Corp. - Class A . . . . . . . 76 1,843
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES/PRINCIPAL VALUE
AMOUNT (NOTE 2)
TRANSPORTATION - 1.26%
RAILROAD - 1.24%
Canadian National Railway - ADR (Note 7) 1,200 $ 75,750
Guangshen Railway Co. Ltd.- ADR (Note 7) 200 1,338
-----------
77,088
-----------
WATER - 0.02%
Trico Marine Services, Inc.* . . . . . . 150 1,191
-----------
78,279
-----------
TOTAL COMMON STOCK
(Identified Cost $718,972) 728,224
-----------
U.S. TREASURY SECURITIES - 72.16%
U.S. TREASURY BONDS - 15.83%
U.S. Treasury Bond, 6.50%, 5/15/2005 . . . $ 625,000 661,524
U.S. Treasury Bond, 7.50%, 11/15/2024. . . 20,000 24,131
U.S. Treasury Bond, 6.875%, 8/15/2025. . . 210,000 236,578
U.S. Treasury Bond, 6.50%, 11/15/2026. . . 55,000 59,417
-----------
TOTAL U.S. TREASURY BONDS
(Identified Cost $946,395) 981,650
-----------
U.S. TREASURY NOTES - 56.33%
U.S. Treasury Note, 6.00%, 8/15/1999 . . . 295,000 296,014
U.S. Treasury Note, 7.50%, 10/31/1999. . . 30,000 30,384
U.S. Treasury Note, 5.50%, 3/31/2000 . . . 125,000 125,664
U.S. Treasury Note, 4.50%, 9/30/2000 . . . 275,000 272,938
U.S. Treasury Note, 6.125%, 9/30/2000. . . 660,000 669,488
U.S. Treasury Note, 5.625%, 2/28/2001. . . 960,000 969,300
U.S. Treasury Note, 6.375%, 9/30/2001. . . 25,000 25,695
U.S. Treasury Note, 7.50%, 11/15/2001. . . 50,000 52,766
U.S. Treasury Note, 6.25%, 6/30/2002 . . . 150,000 154,453
U.S. Treasury Note, 5.875%, 9/30/2002. . . 275,000 280,328
U.S. Treasury Note, 6.25%, 2/15/2003 . . . 215,000 222,256
U.S. Treasury Note, 5.875%, 2/15/2004. . . 75,000 76,922
U.S. Treasury Note, 7.25%, 8/15/2004 . . . 65,000 70,708
U.S. Treasury Note, 6.125%, 8/15/2007. . . 5,000 5,227
U.S. Treasury Note, 5.50%, 2/15/2008 . . . 240,000 241,575
-----------
TOTAL U.S. TREASURY NOTES
(Identified Cost $3,476,322) 3,493,718
-----------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $4,422,717) 4,475,368
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES/PRINCIPAL VALUE
AMOUNT (NOTE 2)
U.S. GOVERNMENT AGENCIES - 6.02%
MORTGAGE BACKED SECURITIES
GNMA, Pool #365225, 9.00%, 11/15/2024. $ 29,321 $ 31,293
GNMA, Pool #398655, 6.50%, 5/15/2026 . 42,369 42,127
GNMA, Pool #473373, 9.00%, 2/15/2027 . 21,099 22,517
GNMA, Pool #452826, 9.00%, 1/15/2028 . 169,966 181,395
GNMA, Pool #460820, 6.00%, 6/15/2028 . 99,025 95,993
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $375,128) 373,325
-----------
SHORT-TERM INVESTMENTS - 9.26%
U.S. Treasury Bill, 6/03/99. . . . . . 300,000 298,815
Dreyfus Treasury Cash Management Fund. 275,576 275,576
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $574,391) 574,391
-----------
TOTAL INVESTMENTS - 99.18%
(Identified Cost $6,091,208) 6,151,308
OTHER ASSETS, LESS LIABILITIES - 0.82% 50,747
-----------
NET ASSETS - 100% $6,202,055
===========
</TABLE>
* Non-income producing security
FEDERAL TAX INFORMATION:
At April 30, 1999, the net unrealized appreciation based on identified cost for
federal income tax purposes of $6,091,208 was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation . . . $116,608
Unrealized depreciation . . . (56,508)
---------
UNREALIZED APPRECIATION - NET $ 60,100
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
APRIL 30, 1999
ASSETS:
Investments, at value (identified cost $6,091,208)(Note 2) $6,151,308
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,517
Interest receivable. . . . . . . . . . . . . . . . . . . . 58,116
Dividends receivable . . . . . . . . . . . . . . . . . . . 3,795
----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . 6,217,736
----------
LIABILITIES:
Accrued management fees (Note 3) . . . . . . . . . . . . . 3,997
Accrued Directors' fees (Note 3) . . . . . . . . . . . . . 3,610
Transfer Agent fees payable (Note 3) . . . . . . . . . . . 121
Audit fee payable. . . . . . . . . . . . . . . . . . . . . 4,067
Other payables and accrued expenses. . . . . . . . . . . . 3,886
----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . 15,681
----------
NET ASSETS FOR 571,548 SHARES OUTSTANDING. . . . . . . . . $6,202,055
==========
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . $ 5,715
Additional paid-in-capital . . . . . . . . . . . . . . . . 6,004,863
Undistributed net investment income. . . . . . . . . . . . 84,280
Accumulated net realized gain on investments . . . . . . . 47,097
Net unrealized appreciation on investments . . . . . . . . 60,100
----------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . $6,202,055
==========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($6,202,055/571,548 shares) . . . . . . . . . . . . . . $ 10.85
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED APRIL 30, 1999
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . $142,524
Dividends (net of foreign tax withheld, $54) . . . . . . 6,759
---------
Total Investment Income. . . . . . . . . . . . . . . . . 149,283
---------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . . . . 23,944
Directors' fees (Note 3) . . . . . . . . . . . . . . . . 3,571
Transfer Agent fees (Note 3) . . . . . . . . . . . . . . 718
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . 4,734
Custodian fee. . . . . . . . . . . . . . . . . . . . . . 2,981
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 5,450
---------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 41,398
Less Reduction of Expenses (Note 3). . . . . . . . . . . (11,447)
---------
Net Expenses . . . . . . . . . . . . . . . . . . . . . . 29,951
---------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 119,332
---------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments (identified cost basis) 60,689
Net change in unrealized appreciation on investments . . (20,994)
---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . 39,695
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $159,027
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE
SIX MONTHS
ENDED FOR THE
4/30/99 YEAR ENDED
(UNAUDITED) 10/31/98
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . $ 119,332 $ 159,505
Net realized gain on investments . . . . . . . . . . . 60,689 13,980
Net change in unrealized appreciation on investments . (20,994) 55,114
------------ ------------
Net increase from operations . . . . . . . . . . . . . 159,027 228,599
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . . (135,037) (91,449)
From net realized gain on investments. . . . . . . . . (20,762) (34,079)
------------ ------------
Total distribution to shareholders . . . . . . . . . . (155,799) (125,528)
------------ ------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share
transactions (Note 5) . . . . . . . . . . . . . . . 465,668 3,866,052
------------ ------------
Net increase in net assets . . . . . . . . . . . . . . 468,896 3,969,123
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . 5,733,159 1,764,036
------------ ------------
END OF PERIOD (including undistributed net investment
income of $84,280 and $99,985, respectively) . . . . . $ 6,202,055 $ 5,733,159
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR THE SIX
MONTHS FOR THE FOR THE FOR THE
ENDED YEAR YEAR YEAR
4/30/99 ENDED ENDED ENDED
(UNAUDITED) 10/31/98 10/31/97 10/31/96
------------- ---------- ---------- ----------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD. . . . . . . . $ 10.85 $ 10.71 $ 10.29 $ 10.00
------------- ---------- ---------- ----------
Income from investment operations:
Net investment income*. . . . . . . . . . . . . . 0.198 0.347 0.426 0.349
Net realized and unrealized gain on
investments . . . . . . . . . . . . . . . . . . . 0.079 0.327 0.447 0.137
------------- ---------- ---------- ----------
Total from investment operations . . . . . . . . . . 0.277 0.674 0.873 0.486
------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income. . . . . . . . . . . . (0.240) (0.352) (0.385) (0.196)
From net realized gain on investments . . . . . . (0.037) (0.182) (0.068) --
------------- ---------- ---------- ----------
Total distribution, to shareholders. . . . . . . . . (0.277) (0.534) (0.453) (0.196)
------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD. . . . . . . . . . . $ 10.85 $ 10.85 $ 10.71 $ 10.29
============= ========== ========== ==========
Total return1. . . . . . . . . . . . . . . . . . . . 2.60% 6.54% 8.74% 4.94%
Ratios (to average net assets) / Supplemental Data:
Expenses*. . . . . . . . . . . . . . . . . . . . 1.00%2 1.00% 1.00% 1.00%
Net investment income* . . . . . . . . . . . . . 3.99%2 4.20% 4.45% 4.26%
Portfolio turnover . . . . . . . . . . . . . . . . . 9% 15% 60% 30%
NET ASSETS - END OF PERIOD (000's omitted) . . . . . $ 6,202 $ 5,733 $ 1,764 $ 745
============= ========== ========== ==========
</TABLE>
*The investment advisor did not impose all or a portion of its management fee in
some periods and paid a portion of the Series expenses. If these expenses had
been incurred by the Series, and had 1999 expenses been limited to that allowed
by state securities law, the net investment income per share and the ratios
would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net investment income . . . . . $ 0.179 $0.287 $0.274 $0.226
Ratios (to average net assets):
Expenses . . . . . . . . . . 1.38%2 1.73% 2.59% 2.50%
Net investment income. . . . 3.61%2 3.47% 2.86% 2.76%
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Defensive Series (the "Series") is a no-load diversified series of Exeter Fund,
Inc. (the "Fund"). The Fund is organized in Maryland and is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company.
The total authorized capital stock of the Fund consists of one billion shares of
common stock each having a par value of $0.01. As of April 30, 1999, 950
million shares have been designated in total among 19 series, of which 37.5
million have been designated as Defensive Series Class A Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities, options and
corporate bonds, listed on an exchange are valued at the latest quoted sales
price of the exchange on which the security is traded most extensively.
Securities not traded on valuation date or securities not listed on an exchange
are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities, will
normally be valued on the basis of evaluated bid prices provided by the Fund's
pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures established by and under the general supervision
and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent that the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments, in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made semi-annually.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Series.
12
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES(continued)
DISTRIBUTIONS OF INCOME AND GAINS (continued)
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a result
of deferral of certain losses, foreign denominated investments, character
reclassification between net income and net gains, or other tax adjustments. As
a result, net investment income (loss) and net investment gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Series may
periodically make reclassifications among its capital accounts without impacting
the Series' net asset value.
MULTIPLE CLASSES OF SHARES OF BENEFICIAL INTEREST
The Series is authorized to issue five classes of shares (Class A, Class B,
Class C, Class D, and Class E shares). Currently, only Class A shares have been
issued. The five classes of shares differ in their respective distribution and
service fees. All shareholders bear the common expenses of the Series pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier Advisors,
Inc. (the "Advisor"), for which the Series pays the Advisor a fee, computed
daily and payable monthly, at an annual rate of 0.80% of the Series' average
daily net assets. The fee amounted to $23,944 for the six months ended April
30, 1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary, pay other
expenses of the Series in order to maintain total expenses for the Series at no
more than 1.0% of average daily net assets each year. Accordingly, the Advisor
waived fees of $11,447 for the six months ended April 30, 1999, which is
reflected as a reduction of expenses on the Statement of Operations. The fee
waiver and assumption of expenses by the Advisor is voluntary and may be
terminated at any time.
13
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES(continued)
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. For these services, the Series pays a fee which is
calculated as a percentage of the average daily net assets at an annual rate of
0.024%; this fee amounted to $718 for the six months ended April 30, 1999.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
The compensation of the non-affiliated Directors totaled $3,571 for the six
months ended April 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 1999, purchases and sales of securities,
other than United States Government securities and short-term securities, were
$188,378 and $491,986, respectively. Purchases and sales of United States
Government securities, other than short-term securities, were $300,148 and
$42,808, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Defensive Series Class A Common Stock were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 4/30/99 Ended 10/31/98
------------------- ----------------
Shares Amount Shares Amount
------------------- ---------------- -------- -----------
<S> <C> <C> <C> <C>
Sold . . . . 105,958 $ 1,143,328 442,590 $4,709,666
Reinvested . 14,643 155,799 12,005 125,528
Repurchased. (77,646) (833,459) (90,651) (969,142)
------------------- ---------------- -------- -----------
Net increase 42,955 $ 465,668 363,944 $3,866,052
=================== ================ ======== ===========
</TABLE>
The Advisor owned 36,591 shares on April 30, 1999 and 35,663 shares on October
31, 1998.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options,
forward foreign currency exchange contracts, and futures contracts and may
involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. No such investments were held by
the Series on April 30, 1999.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. These risks
include revaluation of currencies and potential adverse political and economic
developments. Moreover, securities of foreign companies and foreign governments
may be less liquid and their prices more volatile than those of securities of
comparable domestic companies and the United States Government.
14
<PAGE>
<PAGE>
EXETER FUND, INC.
MAXIMUM HORIZON SERIES
SEMI-ANNUAL REPORT
APRIL 30, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
DEAR SHAREHOLDERS:
In the past six months, we have seen a broad-based recovery in the world's stock
markets. A significant influence on the resurgence has been an improvement in
the state of affairs in Latin America and the Pacific Rim. Overseas markets
have strengthened, fueled largely by increased confidence from foreign
investors.
Here in the U.S., there is still a wide performance gap between the majority of
stocks and the handful of large companies driving the Dow Jones Industrial
Average and S&P 500 Index to new highs. For example, year-to-date through April
30th, 46% of stocks listed on the New York Stock Exchange have actually declined
in value. Although the momentum-driven rally in pricey large company stocks and
a handful of Internet-based stocks continued over the last six months, we have
continued to look elsewhere for buying opportunities.
One area that has contributed to our performance has been foreign stocks, which
have become an increasing focus for us. An extended period of low performance
in overseas markets provided the opportunity to purchase some undervalued
foreign companies. Investor attitudes are now becoming more favorable toward
the foreign markets, and these stocks have begun to rebound from their low
valuations. We feel they will continue to recover as the low prices they
reached give them plenty of room to improve before they reach normal valuation
levels.
Another positive area for us has been oil-related stocks. Oil prices have moved
up significantly, and certain other commodity prices may firm from their
all-time lows. We took advantage of certain buying opportunities in the oil
sector when the prices were low, buying several different oil-related companies.
Oil prices have bounced back from lows of $10 per barrel to around $17 per
barrel, and they are expected to remain stable as supply and demand fundamentals
improve. Rising prices, coupled with the mergers of many of the oil companies,
have led to outstanding performance in this industry. We have sold some of our
holdings in this sector in order to lock in the gains they had earned.
Recognizing that the market is overvalued and the bull market is aging, we have
continued with our current focus on stocks with lower valuations, which we
believe has resulted in strong recent performance while positioning the
portfolio well for the future.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
[graphic]
<pie chart>
Data for pie chart to follow
Asset Allocation - As of 4/30/99:
<TABLE>
<CAPTION>
<S> <C>
Bonds. . . . . . . 9%
Stocks . . . . . . 82%
Cash & Equivalents 9%
</TABLE>
2
<PAGE>
Performance Update as of April 30, 1999 (unaudited)
Exeter Fund, Inc. - Maximum Horizon Series
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
04/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 10,636 6.36% 6.36%
Inception 1 $ 17,406 74.06% 17.17%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Maximum
Horizon Series from its inception (11/1/95)
to present (4/30/99) as compared to the
Standard & Poor's (S&P) 500 Total Return
Index and the Value Line Index. 2
Standard & Poor's 500 Total Return Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
04/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 12,183 21.83% 21.83%
Inception 1 $ 24,458 144.58% 29.15%
</TABLE>
Value Line Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
04/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year. . $ 8,892 -11.08% -11.08%
Inception 1 $ 13,968 39.68% 10.02%
</TABLE>
[graphic]
<line chart>
Data for line chart to follow
<TABLE>
<CAPTION>
Exeter Fund, Inc. Standard & Poors
Maximum Horizon Series 500 Total Return Index Value Line Index
<S> <C> <C> <C>
11/01/95 10,000 10,000 10,000
04/30/96 10,753 11,376 11,154
10/31/96 11,521 12,408 11,198
04/30/97 12,589 14,233 11,780
10/31/97 14,604 16,392 13,998
04/30/98 16,365 20,076 15,708
10/31/98 13,730 19,996 12,805
4/30/99. 17,406 24,458 13,968
</TABLE>
1The Series and Index performance are calculated from November 1,1995, the
Series' inception date. The Series' performance is historical and may not be
indicative of future results.
2The Standard & Poor's (S&P) 500 Total Return Index is an unmanaged
capitalization-weighted measure of 500 widely held common stocks
listed on the New York Stock Exchange, American Stock Exchange,
and the Over-the-Counter Market. The Index returns assume
reinvestment of income and, unlike Series returns, do not reflect any fees
or expenses. The Value Line Index is an unmanaged index that consist of
approximately 1,700 securities that are traded on the New York Stock Exchange,
American Stock Exchange, and the Over-the-Counter Market. The Index returns
Are based on geometric average of relative price changes of the component
stocks, and unlike Series returns, do not reflect any income, fees or expenses
3
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 81.67%
AGRICULTURAL PRODUCTION - 0.06%
Sylvan, Inc.* . . . . . . . . . . . . . . . . . . . . 1,325 $ 13,912
------------
APPAREL - 0.04%
Novel Denim Holdings Ltd.*. . . . . . . . . . . . . . 1,300 10,075
------------
BUSINESS SERVICES - 2.67%
National Data Corp. . . . . . . . . . . . . . . . . . 14,200 654,975
------------
CHEMICAL & ALLIED PRODUCTS - 14.31%
BIOLOGICAL PRODUCTS - 2.23%
Cypress Bioscience, Inc.*. . . . . . . . . . . . . 12,000 44,626
Sigma-Aldrich Corp.. . . . . . . . . . . . . . . . 15,500 503,750
------------
548,376
------------
PHARMACEUTICAL PREPARATIONS - 7.27%
Celltech plc* (United Kingdom) (Note 7). . . . . . 99,525 804,281
Mylan Laboratories, Inc. . . . . . . . . . . . . . 21,300 483,244
Orion-Yhtyma Oyj - B Shares (Finland) (Note 7) . . 700 14,070
Teva Pharmaceutical Industries Ltd. - ADR (Note 7) 10,600 484,950
------------
1,786,545
------------
PLASTIC MATERIALS - 4.81%
Eastman Chemical Co. . . . . . . . . . . . . . . . 9,800 545,737
Wellman, Inc.. . . . . . . . . . . . . . . . . . . 44,500 636,906
1,182,643
3,517,564
------------
COMMUNICATIONS - 0.07%
Granite Broadcasting Corp.* . . . . . . . . . . . . . 2,300 17,394
------------
COMPUTER EQUIPMENT - 1.67%
Bell & Howell Co.*. . . . . . . . . . . . . . . . . . 650 21,734
International Game Technology . . . . . . . . . . . . 21,850 387,837
------------
409,571
------------
COMPUTER INTEGRATED SYSTEMS DESIGN - 0.03%
Apache Medical Systems, Inc.* . . . . . . . . . . . . 4,600 6,037
------------
CRUDE PETROLEUM & NATURAL GAS - 9.15%
Apache Corp.. . . . . . . . . . . . . . . . . . . . . 7,400 227,088
Burlington Resources, Inc.. . . . . . . . . . . . . . 4,600 211,888
Gulf Canada Resources Ltd. - ADR* (Note 7). . . . . . 144,400 577,600
Noble Affiliates, Inc.. . . . . . . . . . . . . . . . 7,100 227,644
Petroleo Brasileiro S.A. (Petrobras) -
ADR (Note 7) . . . . . . . . . . . . . . . . . . . 47,925 774,209
Talisman Energy, Inc.*. . . . . . . . . . . . . . . . 8,700 231,094
------------
2,249,5231
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
DIAMONDS - 0.80%
De Beers Centenary Consolidated Mines - ADR (Note 7) 8,045 $ 197,102
-----------
DOLLS & STUFFED TOYS - 2.65%
Mattel, Inc. . . . . . . . . . . . . . . . . . . . . 25,200 652,050
-----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 8.64%
Gold Peak Industries Ltd. (Hong Kong)(Note 7). . . . 51,000 10,067
Koninklijke Philips Electronics N.V.- ADR (Note 7) . 11,200 956,200
Motorola, Inc. . . . . . . . . . . . . . . . . . . . 14,145 1,133,368
The Carbide/Graphite Group, Inc.*. . . . . . . . . . 1,050 13,650
Ultralife Batteries, Inc.* . . . . . . . . . . . . . 2,225 10,291
-----------
2,123,576
-----------
FOOD & BEVERAGES - 2.32%
Unilever plc - ADR (Note 7). . . . . . . . . . . . . 15,900 569,419
-----------
GLASS PRODUCTS - 2.93%
Corning, Inc.. . . . . . . . . . . . . . . . . . . . 12,400 709,900
Libbey, Inc. . . . . . . . . . . . . . . . . . . . . 300 9,019
-----------
718,919
-----------
HEALTH SERVICES - 1.47%
MedPartners, Inc.* . . . . . . . . . . . . . . . . . 68,940 361,935
-----------
HOTELS & LODGING PLACES - 1.81%
CDL Hotels International Ltd. - ADR* (Note 7). . . . 107,700 444,683
-----------
INDUSTRIAL & COMMERCIAL MACHINERY - 0.34%
Comfort Systems USA, Inc.* . . . . . . . . . . . . . 975 15,356
Hussmann International, Inc. . . . . . . . . . . . . 1,800 28,575
Lam Research Corp.*. . . . . . . . . . . . . . . . . 750 23,625
NN Ball & Roller, Inc. . . . . . . . . . . . . . . . 2,375 16,031
-----------
83,587
-----------
MANAGEMENT SERVICES - 0.03%
Boron, LePore & Associates, Inc.*. . . . . . . . . . 725 7,431
-----------
PAPER & ALLIED PRODUCTS - 10.91%
Aracruz Celulose S.A. - ADR (Note 7) . . . . . . . . 46,600 932,000
Asia Pulp & Paper Co. Ltd. - ADR* (Note 7) . . . . . 41,200 432,600
Fort James Corp. . . . . . . . . . . . . . . . . . . 13,200 501,600
Kimberly-Clark Corp. . . . . . . . . . . . . . . . . 12,275 752,611
Schweitzer-Mauduit International, Inc. . . . . . . . 1,075 17,805
Smurfit-Stone Container Corp.* . . . . . . . . . . . 1,905 44,529
-----------
2,681,145
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
PRINTING & PUBLISHING - 2.25%
South China Morning Post (Holdings) Ltd - ADR (Note 7) 183,425 $ 553,228
-----------
REFUSE SYSTEMS - 0.06%
Newpark Resources, Inc.* . . . . . . . . . . . . . . . 1,625 14,930
-----------
RESTAURANTS - 3.31%
McDonald's Corp. . . . . . . . . . . . . . . . . . . . 19,170 812,329
-----------
RETAIL - SPECIALTY STORES - 0.04%
Hancock Fabrics, Inc.. . . . . . . . . . . . . . . . . 1,725 10,889
-----------
SOFTWARE - 2.51%
Oracle Corp.*. . . . . . . . . . . . . . . . . . . . . 22,800 617,025
-----------
TECHNICAL INSTRUMENTS & SUPPLIES - 6.89%
Eastman Kodak Co.. . . . . . . . . . . . . . . . . . . 11,140 831,323
Ecilpse Surgical Technologies, Inc.* . . . . . . . . . 1,340 11,976
Millipore Corp.. . . . . . . . . . . . . . . . . . . . 26,350 808,616
Orbital Sciences Corp.*. . . . . . . . . . . . . . . . 1,700 35,806
Sola International, Inc.*. . . . . . . . . . . . . . . 425 6,322
-----------
1,694,043
-----------
TELECOMMUNICATION SERVICES - 3.18%
Microcell Telecommunications, Inc. -ADR* (Note 7). . . 3,375 26,156
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR PFD (Note 7). . . . . . . . . . . . . . . . . . 8,275 754,577
Telecomunicacoes Brasileiras S.A. (Telebras)
ADR (Note 7). . . .. . . .. . . .. . . .. . . .. . . 8,275 646
-----------
781,379
-----------
TESTING LABORATORIES - 0.07%
Paradigm Geophysical Ltd.* . . . . . . . . . . . . . . 2,525 16,413
-----------
TEXTILE MILL PRODUCTS - 0.13%
Albany International Corp. - Class A . . . . . . . . . 1,285 31,161
-----------
TRANSPORTATION - 3.33%
RAILROAD - 3.25%
Canadian National Railway Co. - ADR (Note 7). . . . 12,275 774,859
Guangshen Railway Co. Ltd.- ADR (Note 7). . . . . . 3,400 22,738
-----------
797,597
-----------
WATER - 0.08%
Trico Marine Services, Inc.*. . . . . . . . . . . . 2,600 20,638
-----------
818,235
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE
AMOUNT/SHARES (NOTE 2)
TOTAL COMMON STOCK
(Identified Cost $18,617,579) $20,068,530
------------
U.S. TREASURY SECURITIES - 8.74%
U.S. Treasury Note, 5.375%, 6/30/2003 . . . . . $ 300,000 301,125
U.S. Treasury Note, 4.75%, 2/15/2004. . . . . . 700,000 686,000
U.S. Treasury Bond, 6.875%, 8/15/2025. . . . . 210,000 236,578
U.S. Treasury Bond, 6.50%, 11/15/2026 . . . . . 855,000 923,668
------------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $2,150,833) 2,147,371
------------
SHORT-TERM INVESTMENTS - 7.95%
Federal Mortgage Corp. Discount Note, 6/4/1999. 1,000,000 995,589
Dreyfus Treasury Cash Management Fund . . . . . 958,942 958,942
------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $1,954,531) 1,954,531
------------
TOTAL INVESTMENTS - 98.36%
(Identified Cost $22,722,943) 24,170,432
------------
OTHER ASSETS, LESS LIABILITIES - 1.64% 401,441
------------
NET ASSETS - 100% $24,571,873
============
</TABLE>
*Non-income producing security
FEDERAL TAX INFORMATION:
At April 30, 1999, the net unrealized appreciation based on identified cost for
federal income tax purposes of $22,722,943 was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation . . . $ 2,878,792
Unrealized depreciation . . . (1,431,303)
------------
UNREALIZED APPRECIATION - NET $ 1,447,489
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
APRIL 30, 1999
ASSETS:
Investments, at value (identified cost $22,722,943)(Note 2) $24,170,432
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,463
Receivable for securities sold. . . . . . . . . . . . . . . 227,577
Dividends receivable. . . . . . . . . . . . . . . . . . . . 51,797
Interest receivable . . . . . . . . . . . . . . . . . . . . 40,909
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . 24,610,178
------------
LIABILITIES:
Accrued management fees (Note 3) . . . . . . . . . . . . . . 24,121
Accrued Directors' fees (Note 3) . . . . . . . . . . . . . . 3,611
Transfer Agent fees payable (Note 3) . . . . . . . . . . . . 455
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . 4,033
Other payables and accrued expenses. . . . . . . . . . . . . 6,085
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . 38,305
------------
NET ASSETS FOR 1,702,527 SHARES OUTSTANDING. . . . . . . . . $24,571,873
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . $ 17,025
Additional paid-in-capital . . . . . . . . . . . . . . . . . 22,090,445
Undistributed net investment loss. . . . . . . . . . . . . . (50,213)
Accumulated net realized gain on investments . . . . . . . . 1,067,131
Net unrealized appreciation on investments . . . . . . . . . 1,447,485
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . $24,571,873
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($24,571,873/1,702,527 shares). . . . . . . . . . . . . . $ 14.43
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED APRIL 30, 1999
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $4,704). . . . . $ 145,377
Interest . . . . . . . . . . . . . . . . . . . . . . . . 81,885
-----------
Total Investment Income. . . . . . . . . . . . . . . . . 227,262
-----------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . . . . 103,695
Directors' fees (Note 3) . . . . . . . . . . . . . . . . 3,571
Transfer Agent fees (Note 3) . . . . . . . . . . . . . . 2,489
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . 5,516
Custodian fee. . . . . . . . . . . . . . . . . . . . . . 4,743
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 8,995
-----------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 129,009
Less Reduction of Expenses (Note 3). . . . . . . . . . . (4,575)
-----------
Net Expenses . . . . . . . . . . . . . . . . . . . . . . 124,434
-----------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 102,828
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments (identified cost basis) 1,095,598
and other assets
Net change in unrealized appreciation on
investments and other assets . . . . . . . . . . . . . 3,921,681
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . 5,017,279
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $5,120,107
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the Six
Months Ended For the
4/30/99 Year Ended
(unaudited) 10/31/98
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income . . . . . . . . . . . . $ 102,828 $ 195,692
Net realized gain on investments. . . . . . . 1,095,598 983,037
Net change in unrealized appreciation on
investments . . . . . . . . . . . . . . . . . 3,921,681 (2,448,394)
-------------- ------------
Net increase (decrease) from operations. . . 5,120,107 (1,269,665)
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income. . . . . . . . . . (260,337) (141,415)
From net realized gain on investments . . . . (911,021) (1,010,011)
-------------- ------------
Total distributions to shareholders . . . . . (1,171,358) (1,151,426)
-------------- ------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share
transactions (Note 5). . . . . . . . . . . 1,918,567 11,273,954
-------------- ------------
Net increase in net assets. . . . . . . . . . 5,867,316 8,852,863
NET ASSETS:
Beginning of period . . . . . . . . . . . . . 18,704,557 9,851,694
-------------- ------------
END OF PERIOD (including undistributed net
investment income of ($50,213) and $107,296,
respectively) . . . . . . . . . . . . . . . . $ 24,571,873 $18,704,557
============== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR THE SIX FOR THE FOR THE FOR
MONTHS ENDED YEAR YEAR THEYEAR
4/30/99 ENDED ENDED ENDED
(UNAUDITED) 10/31/98 10/31/97 10/31/96
------------ ---------- ---------- ----------
Per share data (for a share outstanding
throughout Each period):
NET ASSET VALUE - BEGINNING OF PERIOD. . . $ 12.10 $ 14.24 $ 11.38 $ 10.00
------------ ---------- ---------- ----------
Income from investment operations:
Net investment income*. . . . . . . . . 0.067 0.134 0.101 0.155
Net realized and unrealized
gain (loss) on investments . .. . . . 3.005 (0.935) 2.919 1.356
------------ ---------- ---------- ----------
Total from investment operations . . . . . 3.072 (0.801) 3.020 1.511
------------ ---------- ---------- ----------
Less distributions to shareholders:
From net investment income . . . . . . . (0.165) (0.123) (0.082) (0.131)
From net realized gain on investments. . (0.577) (1.216) (0.078) --
------------ ---------- ---------- ----------
Total distributions to shareholders . . (0.742) (1.339) (0.160) (0.131)
------------ ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD. . . . . . $ 14.43 $ 12.10 $ 14.24 $ 11.38
============ ========== ========== ==========
Total return1. . . . . . . . . . . . . . . 26.78% (5.99%) 26.77% 15.21%
Ratios (to average net assets)
/ Supplemental Data:
Expenses*. . . . . . . . . . . . . . . 1.20%2 1.20% 1.20% 1.20%
Net investment income* . . . . . . . . 0.99%2 1.25% 0.94% 1.71%
Portfolio turnover . . . . . . . . . . . . 52% 60% 115% 95%
NET ASSETS - END OF PERIOD (000's omitted) $ 24,572 $ 18,705 $ 9,852 $ 1,574
============ ========== ========== ==========
</TABLE>
* The investment advisor did not impose all or a portion of its management fee
and in some periods
paid a portion of the Series' expenses. If these expenses had been incurred by
the Series, and had
1996 expenses been limited to that allowed by state securities law, the net
investment income per share and the ratios would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net investment income . . . . . $ 0.064 $0.121 $0.063 $0.037
Ratios (to average net assets):
Expenses . . . . . . . . . . 1.24%2 1.32% 1.55% 2.50%
Net investment income. . . . 0.95%2 1.13% 0.59% 0.41%
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Maximum Horizon Series (the "Series") is a no-load diversified series of Exeter
Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company.
The total authorized capital stock of the Fund consists of one billion shares of
common stock each having a par value of $0.01. As of April 30, 1999, 950
million shares have been designated in total among 19 series, of which 75
million have been designated as Maximum Horizon Series Class A Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities, options and
corporate bonds, listed on an exchange are valued at the latest quoted sales
price of the exchange on which the security is traded most extensively.
Securities not traded on valuation date or securities not listed on an exchange
are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities, will
normally be valued on the basis of evaluated bid prices provided by the Fund's
pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures established by and under the general supervision
and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments, in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made semi-annually.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Series.
12
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
DISTRIBUTIONS OF INCOME AND GAINS (continued)
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a result
of deferral of certain losses, foreign denominated investments, character
reclassification between net income and net gains, or other tax adjustments. As
a result, net investment income (loss) and net investment gain (loss) on
investment transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Series may
periodically make reclassifications among its capital accounts without impacting
the Series' net asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Series are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis: a)
investment securities, other assets and liabilities are converted to U.S.
dollars based upon current exchange rates; and b) purchases and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange rates is
not separately stated.
MULTIPLE CLASSES OF SHARES OF COMMON STOCK
The Series is authorized to issue five classes of shares (Class A, Class B,
Class C, Class D, and Class E shares). Currently, only Class A shares have been
issued. The five classes of shares differ in their respective distribution and
service fees. All shareholders bear the common expenses of the Series pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
OTHER
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier Advisors,
Inc. (the "Advisor"), for which the Series pays the Advisor a fee, computed
daily and payable monthly, at an annual rate of 1.0% of the Series' average
daily net assets. The fee amounted to $103,695 for the six months ended April
30, 1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are
13
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
"affiliated persons" of the Fund or of the Advisor, and all personnel of the
Fund or of the Advisor performing services relating to research, statistical and
investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary, pay other
expenses of the Series in order to maintain total expenses for the Series at no
more than 1.20% of average daily net assets each year. Accordingly, the Advisor
waived fees of $4,575 for the six months ended April 30, 1999, which is
reflected as a reduction of expenses on the Statement of Operations. The fee
waiver and assumption of expenses by the Advisor is voluntary and may be
terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. For these services, the Series pays a fee which is
calculated as a percentage of the average daily net assets at an annual rate of
0.024%; this fee amounted to $2,489 for the six months ended April 30, 1999.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
The compensation of the non-affiliated Directors totaled $3,571 for the six
months ended April 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 1999, purchases and sales of securities,
other than United States Government securities and short-term securities, were
$7,027,406 and $7,923,638, respectively. Purchases and sales of United States
Government securities, other than short-term securities, were $3,281,938 and
$2,243,022, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Maximum Horizon Series Class A Common Stock were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 4/30/99 Ended 10/31/98
------------------- ---------------
<S> <C> <C> <C> <C>
Shares Amount Shares Amount
------------------- ----------- ---------- ---------------
Sold . . . . 293,586 3,727,521 1,001,792 13,203,479
Reinvested . 99,521 1,171,358 90,611 1,148,470
Repurchased. (237,004) (2,980,312) (237,720) (3,077,995)
------------------- ----------- ---------- ---------------
Net increase 156,103 1,918,567 854,683 11,273,954
=================== =========== ========== ===============
</TABLE>
The Advisor owned 15,078 shares on April 30, 1999 and 14,184 shares on October
31, 1998.
14
<PAGE>
Notes to Financial Statements (unaudited)
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options,
forward foreign currency exchange contracts, and futures contracts and may
involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. No such investments were held by
the Series on April 30, 1999.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of foreign companies and foreign governments
may be less liquid and their prices more volatile than those of securities of
comparable domestic companies and the United States Government.
15
<PAGE>
<PAGE>
EXETER FUND, INC.
TAX MANAGED SERIES
SEMI-ANNUAL REPORT
APRIL 30, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
DEAR SHAREHOLDERS:
In the past six months, we have seen a broad-based recovery in the world's stock
markets. A significant influence on the resurgence has been an improvement in
the state of affairs in Latin America and the Pacific Rim. Overseas markets
have strengthened, fueled largely by increased confidence from foreign
investors.
Here in the U.S., there is still a wide performance gap between the majority of
stocks and the handful of large companies driving the Dow Jones Industrial
Average and S&P 500 Index to new highs. For example, year-to-date through April
30th, 46% of stocks listed on the New York Stock Exchange have actually
declined. Although the momentum-driven rally in pricey large company stocks and
a handful of Internet-based stocks continued over the last six months, we have
continued to look elsewhere for buying opportunities.
One area that has contributed to our performance has been foreign stocks, which
have become an increasing focus for us. An extended period of low performance
in overseas markets provided the opportunity to purchase some undervalued
foreign companies. Investor attitudes are now becoming more favorable toward
the foreign markets, and these stocks have begun to rebound from their low
valuations. We feel they will continue to recover as the low prices they
reached give them plenty of room to improve before they reach normal valuation
levels.
In recent months, oil prices have had an effect on the market, as oil prices
have bounced back from lows of $10 a barrel to around $17 a barrel. Because of
the tax sensitivity of this Series, our ability to participate in cyclical
sectors of the market is limited, as they result in higher stock turnover.
However, we have managed to benefit from a couple of select oil stocks which we
felt warranted longer-term holding periods.
Recognizing that the market is overvalued and the bull market is aging, we have
continued with our current focus on stocks with lower valuations, which we
believe has positioned the portfolio well for the future.
Besides being able to make some stock purchases at prices considered attractive
by our investment disciplines, we have worked to minimize taxable distributions
by the Series. We sold some of the Series' holdings in order to generate losses
to offset the gains in the portfolio, thus minimizing the tax impact to the
holders of the Series. We will continue to utilize these management techniques
in the future to ease the tax burden of the shareholders.
As always, we appreciate the opportunity to serve you.
Sincerely,
Exeter Asset Management
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
[graphic]
<pie chart>
Data for pie chart to follow
Portfolio Composition - As of 4/30/99:
<TABLE>
<CAPTION>
<S> <C>
Chemical & Allied Products . . . . 15%
Crude Petroleum & Natural Gas. . . 9%
Electronics & Electrical Equipment 8%
Glass Products . . . . . . . . . . 5%
Paper & Allied Products. . . . . . 7%
Restaurants. . . . . . . . . . . . 5%
Software . . . . . . . . . . . . . 6%
Technical Instruments & Supplies . 6%
Telecommunication Services . . . . 5%
Transportation . . . . . . . . . . 6%
Miscellaneous* . . . . . . . . . . 28%
*Miscellaneous
Air Transportation
Apparel
Business Services
Computer Equipment
Dolls & Stuffed Toys
Federal Credit Agencies
Food & Beverages
Health Services
Cash, short-term investments,
and liabilities, less other assets
</TABLE>
2
<PAGE>
Performance Update as of April 30, 1999 (unaudited)
Exeter Fund, Inc. - Tax Managed Series
<TABLE>
<CAPTION>
Total Return
Growth of $10,000
Through Average
04/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year . $ 10,445 4.45% 4.45%
Inception1 $ 17,994 79.94% 18.28%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Tax Managed
Series from its inception (11/1/95) to present
(4/30/99) as compared to the Standard &
Poor's (S&P) 500 Total Return Index and Value Line Index.2
Standard & Poor's 500 Total Return
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
04/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year . $ 12,183 21.83% 21.83%
Inception1 $ 24,458 144.58% 29.15%
</TABLE>
Value Line Index
<TABLE>
<CAPTION>
Total Return
Growth of $10,000
Through Average
04/30/99 Investment Cumulative Annual
<S> <C> <C> <C>
One Year . $ 8,892 -11.08% -11.08%
Inception1 $ 13,968 39.68% 10.02%
</TABLE>
[graphic]
<line chart>
Data for line chart to follow
<TABLE>
<CAPTION>
Exeter Fund, Inc. Standard & Poors 500
Tax Managed Series Total Return Index Value Line Index
<S> <C> <C> <C>
11/01/95 10,000 10,000 10,000
10/31/96 11,630 12,408 11,198
10/31/97 15,200 16,392 13,998
10/31/98 14,855 19,996 12,805
04/30/99 17,994 24,458 13,968
</TABLE>
1The Series and Index performance are calculated from November 1,1995, the
Series' inception date. The Series' performance is historical and may not be
indicative of future results.
2The Standard & Poor's (S&P) 500 Total Return Index is an unmanaged
capitalization-weighted measure of 500 widely held common stocks
listed on the New York Stock Exchange, American Stock Exchange,
and the Over-the-Counter Market. The Index returns assume
reinvestment of income and, unlike Series returns, do not reflect any fees
or expenses. The Value Line Index is an unmanaged index that consist of
approximately 1,700 securities that are traded on the New York Stock Exchange,
American Stock Exchange, and the Over-the-Counter Market. The Index returns
Are based on geometric average of relative price changes of the component
stocks, and unlike Series returns, do not reflect any income, fees or expenses.
3
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 97.38%
AIR TRANSPORTATION - 2.21%
FDX Corp.* . . . . . . . . . . . . . . . . . . . . . 200 $ 22,512
---------
APPAREL - 3.01%
Liz Claiborne, Inc.. . . . . . . . . . . . . . . . . 925 30,583
---------
BUSINESS SERVICES - 3.62%
National Data Corp.. . . . . . . . . . . . . . . . . 798 36,808
---------
CHEMICAL & ALLIED PRODUCTS - 14.96%
BIOLOGICAL PRODUCTS - 3.67%
Sigma-Aldrich Corp.. . . . . . . . . . . . . . . . 1,150 37,375
---------
PHARMACEUTICAL PREPARATIONS - 11.29%
American Home Products Corp. . . . . . . . . . . . 400 24,400
Johnson & Johnson. . . . . . . . . . . . . . . . . 175 17,062
Mylan Laboratories, Inc. . . . . . . . . . . . . . 1,100 24,956
Pharmacia & Upjohn, Inc. . . . . . . . . . . . . . 375 21,000
Teva Pharmaceutical Industries Ltd. - ADR (Note 7) 600 27,450
---------
114,868
---------
152,243
---------
COMPUTER EQUIPMENT - 1.97%
Bell & Howell Co.* . . . . . . . . . . . . . . . . . 600 20,062
---------
CRUDE PETROLEUM & NATURAL GAS - 9.24%
Gulf Canada Resources Ltd. - ADR* (Note 7) . . . . . 11,000 44,000
Petroleo Brasileiro S.A. (Petrobras) -
ADR (Note 7). . . . . . . . . . . . . . . . . . . 3,100 50,079
---------
94,079
---------
DOLLS & STUFFED TOYS - 3.94%
Mattel, Inc. . . . . . . . . . . . . . . . . . . . . 1,550 40,106
---------
ELECTRONICS & ELECTRICAL EQUIPMENT - 7.61%
Koninklijke Philips Electronics NV-ADR (Note 7). . . 250 21,344
Motorola, Inc. . . . . . . . . . . . . . . . . . . . 700 56,088
---------
77,432
---------
FEDERAL CREDIT AGENCIES - 2.44%
Fannie Mae . . . . . . . . . . . . . . . . . . . . . 350 24,828
---------
FOOD & BEVERAGES - 3.52%
Unilever plc - ADR (Note 7). . . . . . . . . . . . . 1,000 35,813
---------
GLASS PRODUCTS - 5.48%
Corning, Inc.. . . . . . . . . . . . . . . . . . . . 975 55,819
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
HEALTH SERVICES - 3.35%
MedPartners, Inc.* . . . . . . . . . . . . . . . . . 6,500 $ 34,125
-----------
PAPER & ALLIED PRODUCTS - 7.43%
Fort James Corp. . . . . . . . . . . . . . . . . . . 740 28,120
Kimberly-Clark Corp. . . . . . . . . . . . . . . . . 775 47,517
-----------
75,637
-----------
SOFTWARE - 5.58%
Oracle Corp.*. . . . . . . . . . . . . . . . . . . . 2,100 56,831
-----------
RESTAURANTS - 5.41%
McDonald's Corp. . . . . . . . . . . . . . . . . . . 1,300 55,088
-----------
TECHNICAL INSTRUMENTS & SUPPLIES - 6.16%
Eastman Kodak Co.. . . . . . . . . . . . . . . . . . 450 33,581
Millipore Corp.. . . . . . . . . . . . . . . . . . . 950 29,153
-----------
62,734
-----------
TELECOMMUNICATION SERVICES - 5.38%
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR PFD (Note 7) . . . . . . . . . . . . . . 600 54,713
Telecomunicacoes Brasileiras S.A., (Telebras)
ADR (Note 7) . . . . . . . . . . . . . . . . 600 47
-----------
54,760
-----------
TRANSPORTATION - 6.07%
Canadian National Railway Co. - ADR (Note 7) . . . . 625 39,453
The Boeing Co. . . . . . . . . . . . . . . . . . . . 550 22,344
-----------
61,797
-----------
TOTAL COMMON STOCK
(Identified Cost $770,025) 991,257
-----------
SHORT-TERM INVESTMENTS - 3.01%
Dreyfus Treasury Cash Management Fund
(Identified Cost $30,641). . . . . . . . . . . . 30,641 30,641
-----------
TOTAL INVESTMENTS - 100.39%
(Identified Cost $800,666) 1,021,898
LIABILITIES, LESS OTHER ASSETS - (0.39)% 3,937
-----------
NET ASSETS - 100% $1,017,961
===========
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - April 30, 1999 (unaudited)
Federal Tax Information:
At April 30, 1999, the net unrealized appreciation based on identified cost for
federal income tax purposes of $800,666 was as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation . . . $226,158
Unrealized depreciation . . . (4,926)
---------
UNREALIZED APPRECIATION - NET $221,232
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
April 30, 1999
ASSETS:
Investments, at value (identified cost $800,666)(Note 2) $1,021,898
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 645
Dividends receivable . . . . . . . . . . . . . . . . . . 2,412
Receivable from investment advisor (Note 3). . . . . . . 6,552
-----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . 1,031,507
-----------
LIABILITIES:
Accrued Directors' fees (Note 3) . . . . . . . . . . . . 3,609
Transfer Agent fees payable (Note 3) . . . . . . . . . . 102
Audit fee payable. . . . . . . . . . . . . . . . . . . . 4,070
Other payables and accrued expenses. . . . . . . . . . . 5,765
-----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . 13,546
-----------
NET ASSETS FOR 58,869 SHARES OUTSTANDING . . . . . . . . $1,017,961
===========
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . $ 588
Additional paid-in-capital . . . . . . . . . . . . . . . 808,849
Undistributed net investment loss. . . . . . . . . . . . (429)
Accumulated net realized loss on investments . . . . . . (12,279)
Net unrealized appreciation on investments . . . . . . . 221,232
-----------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . $1,017,961
-----------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($1,017,961/58,869 shares). . . . . . . . . . . . . . $ 17.29
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED APRIL 30, 1999
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $121). . . . . . $ 5,626
Interest . . . . . . . . . . . . . . . . . . . . . . . . 1,048
---------
Total Investment Income. . . . . . . . . . . . . . . . . 6,674
---------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . . . . 4,237
Directors' fees (Note 3) . . . . . . . . . . . . . . . . 3,571
Transfer Agent fees (Note 3) . . . . . . . . . . . . . . 102
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . 4,734
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 3,235
---------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 15,879
Less Reduction of Expenses (Note 3). . . . . . . . . . . (10,789)
---------
Net Expenses . . . . . . . . . . . . . . . . . . . . . . 5,090
---------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 1,584
---------
REALIZED AND UNREALIZED GAIN(LOSS)
ON INVESTMENTS:
Net realized loss on investments (identified cost basis) (8,097)
Net change in unrealized appreciation on investments . . 168,759
---------
NET REALIZED AND UNREALIZED GAIN(LOSS)
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . 160,662
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $162,246
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the
Six Months For the
Ended Year
4/30/99 Ended
(unaudited) 10/31/98
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . $ 1,584 $ 5,151
Net realized loss on investments . . . . . . . . . . . (8,097) (878)
Net change in unrealized appreciation on investments . 168,759 (37,135)
------------------ ----------
Net increase (decrease) from operations. . . . . . . . 162,246 (32,862)
------------------ ----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . . (7,164) --
From net realized gain on investments. . . . . . . . . (3,302) (14,205)
------------------ ----------
Total distributions to shareholders. . . . . . . . . . (10,466) (14,205)
------------------ ----------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share transactions (Note 5). 94,435 294,616
------------------ ----------
Net increase in net assets . . . . . . . . . . . . . . 246,215 247,549
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . 771,746 524,197
------------------ ----------
END OF PERIOD (including undistributed net investment
Income of ($429) and $5,151, respectively). . . . . $ 1,017,961 $ 771,746
================== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the
Six Months For the For the For the Year
Ended 4/30/99 Year Ended Year Ended Ended
(unaudited) 10/31/98 10/31/97 10/31/96
--------------- ------------ ------------ --------------
Per share data (for a share outstanding throughout
Each period):
NET ASSET VALUE - BEGINNING OF PERIOD. . . . . . . . $ 14.46 $ 15.20 $ 11.63 $ 10.00
--------------- ------------ ------------ --------------
Income from investment operations:
Net investment income (loss)* . . . . . . . . . . 0.029 0.097 (0.008) (0.020)
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . 2.995 (0.440) 3.578 1.650
--------------- ------------ ------------ --------------
Total from investment operations . . . . . . . . . . 3.024 (0.343) 3.570 1.630
--------------- ------------ ------------ --------------
Less distributions to shareholders:
From net investment income. . . . . . . . . . . . (0.133) -- -- --
From net realized gain on investments . . . . . . (0.061) (0.397) -- --
--------------- ------------ ------------ --------------
Total distributions to shareholders. . . . . . . . . (0.194) (0.397)
--------------- ------------ ------------ --------------
NET ASSET VALUE - END OF PERIOD. . . . . . . . . . . $ 17.29 $ 14.46 $ 15.20 $ 11.63
=============== ============ ============ ==============
Total return 1 . . . . . . . . . . . . . . . . . . . 21.13% (2.27%) 30.70% 16.30%
Ratios (to average net assets) / Supplemental Data:
Expenses*. . . . . . . . . . . . . . . . . . . . 1.20%2 1.20% 1.20% 1.20%
Net investment income (loss)*. . . . . . . . . . 0.37%2 0.73% (0.09%) (0.21%)
Portfolio turnover . . . . . . . . . . . . . . . . . 61% 65% 103% 78%
NET ASSETS - END OF PERIOD (000's omitted) . . . . . $ 1,018 $ 772 $ 524 $ 224
=============== ============ ============ ==============
</TABLE>
*The investment advisor did not impose its management fee and paid a portion of
the Series' expenses. If these expenses had been incurred by the Series, and
had 1996 expenses been limited to that allowed by state securities law, the net
investment loss per share and the ratios would have been as follows
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net investment income (loss) . . ($0.170) ($0.431) ($0.620) ($0.144)
Ratios (to average net assets):
Expenses. . . . . . . . . . . 3.75%2 5.17% 8.08% 2.50%
Net investment loss . . . . . (2.18%)2 (3.24%) (6.97%) (1.51%)
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Tax Managed Series (the "Series") is a no-load diversified series of Exeter
Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company.
The total authorized capital stock of the Fund consists of one billion shares of
common stock each having a par value of $0.01. As of April 30, 1999, 950
million shares have been designated in total among 19 series, of which 37.5
million have been designated as Tax Managed Series Class A Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities, options and
corporate bonds, listed on an exchange are valued at the latest quoted sales
price of the exchange on which the security is traded most extensively.
Securities not traded on valuation date or securities not listed on an exchange
are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities, will
normally be valued on the basis of evaluated bid prices provided by the Fund's
pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures established by and under the general supervision
and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the Series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent that the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments, in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made annually.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Series.
11
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
DISTRIBUTIONS OF INCOME AND GAINS (continued)
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a result
of deferral of certain losses, character reclassification between net income and
net gains, or other tax adjustments. As a result, net investment income (loss)
and net investment gain (loss) on investment transactions for a reporting period
may differ significantly from distributions to shareholders during such period.
As a result, the Series may periodically make reclassifications among its
capital accounts without impacting the Series' net asset value.
MULTIPLE CLASSES OF SHARES OF COMMON STOCK
The Series is authorized to issue five classes of shares (Class A, Class B,
Class C, Class D, and Class E shares). Currently, only Class A shares have been
issued. The five classes of shares differ in their respective distribution and
service fees. All shareholders bear the common expenses of the Series pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are declared separately for each class. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
OTHER
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier Advisors,
Inc. (the "Advisor"), for which the Series pays the Advisor a fee, computed
daily and payable monthly, at an annual rate of 1.0% of the Series' average
daily net assets. The fee amounted to $4,237 for the six months ended April 30,
1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary, pay other
expenses of the Series in order to maintain total expenses for the Series at no
more than 1.2% of average daily net assets each year. Accordingly, the Advisor
did not impose any of its fee and paid expenses amounting to $6,552 for the six
months ended April 30, 1999, which is reflected as a reduction of expenses on
the Statement of Operations. The fee waiver and assumption of expenses by the
Advisor is voluntary and may be terminated at any time.
12
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. For these services, the Series pays a fee which is
calculated as a percentage of the average daily net assets at an annual rate of
0.024%; this fee amounted to $102 for the six months ended April 30, 1999.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
The compensation of the non-affiliated Directors totaled $3,571 for the six
months ended April 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 1999, purchases and sales of securities,
other than United States Government securities and short-term securities, were
$582,786 and $497,246, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Tax Managed Series Class A Common Stock were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 4/30/99 Ended 10/31/98
------------------- ---------------
Shares Amount Shares Amount
------------------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
Sold . . . . 18,673 $ 298,983 33,205 $ 509,255
Reinvested . 703 10,466 962 13,996
Repurchased. (13,871) (215,014) (15,294) (228,635)
------------------- ---------- --------------- ----------
Net increase 5,505 $ 94,435 18,873 $ 294,616
=================== ========== =============== ==========
</TABLE>
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing exposure
to various market risks. These financial instruments include written options,
forward foreign currency exchange contracts, and futures contracts and may
involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. No such investments were held by
the Series on April 30, 1999.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments
involves special risks and considerations not typically associated with
investing in securities of domestic companies and the United States Government.
These risks include revaluation of currencies and future adverse political and
economic developments. Moreover, securities of foreign companies and foreign
governments may be less liquid and their prices more volatile than those of
securities of comparable domestic companies and the United States Government.
13
<PAGE>
<PAGE>
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] EXETER FUND FLEXIBLE YIELD SERIES 1
[NUMBER] 13
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1999
[PERIOD-START] NOV-01-1998
[PERIOD-END] APR-30-1999
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 1498139
[INVESTMENTS-AT-VALUE] 1482266
[RECEIVABLES] 25856
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1508122
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 12963
[TOTAL-LIABILITIES] 12963
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1503886
[SHARES-COMMON-STOCK] 144997
[SHARES-COMMON-PRIOR] 108126
[ACCUMULATED-NII-CURRENT] 9171
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (2025)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (15873)
[NET-ASSETS] 1495159
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 32951
[OTHER-INCOME] 0
[EXPENSES-NET] 4752
[NET-INVESTMENT-INCOME] 28199
[REALIZED-GAINS-CURRENT] (1181)
[APPREC-INCREASE-CURRENT] (29886)
[NET-CHANGE-FROM-OPS] (2868)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 27208
[DISTRIBUTIONS-OF-GAINS] 3806
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 98527
[NUMBER-OF-SHARES-REDEEMED] 64652
[SHARES-REINVESTED] 2996
[NET-CHANGE-IN-ASSETS] 351290
[ACCUMULATED-NII-PRIOR] 8180
[ACCUMULATED-GAINS-PRIOR] 2962
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2376
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 15294
[AVERAGE-NET-ASSETS] 1369360
[PER-SHARE-NAV-BEGIN] 10.58
[PER-SHARE-NII] 0.204
[PER-SHARE-GAIN-APPREC] (0.224)
[PER-SHARE-DIVIDEND] 0.217
[PER-SHARE-DISTRIBUTIONS] 0.033
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.31
[EXPENSE-RATIO] 0.70
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] EXETER FUND FLEXIBLE YIELD SERIES 2
[NUMBER] 14
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1999
[PERIOD-START] NOV-01-1998
[PERIOD-END] APR-30-1999
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 609649
[INVESTMENTS-AT-VALUE] 634068
[RECEIVABLES] 20475
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 654543
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 14042
[TOTAL-LIABILITIES] 14042
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 611015
[SHARES-COMMON-STOCK] 63797
[SHARES-COMMON-PRIOR] 66609
[ACCUMULATED-NII-CURRENT] 4729
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 338
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 24419
[NET-ASSETS] 640501
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 18873
[OTHER-INCOME] 0
[EXPENSES-NET] 2583
[NET-INVESTMENT-INCOME] 16290
[REALIZED-GAINS-CURRENT] 646
[APPREC-INCREASE-CURRENT] (21536)
[NET-CHANGE-FROM-OPS] (4600)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 19368
[DISTRIBUTIONS-OF-GAINS] 5048
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 5483
[NUMBER-OF-SHARES-REDEEMED] 10695
[SHARES-REINVESTED] 2400
[NET-CHANGE-IN-ASSETS] (58828)
[ACCUMULATED-NII-PRIOR] 7807
[ACCUMULATED-GAINS-PRIOR] 4740
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1452
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 14065
[AVERAGE-NET-ASSETS] 650876
[PER-SHARE-NAV-BEGIN] 10.50
[PER-SHARE-NII] 0.259
[PER-SHARE-GAIN-APPREC] (0.340)
[PER-SHARE-DIVIDEND] 0.302
[PER-SHARE-DISTRIBUTIONS] 0.077
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.04
[EXPENSE-RATIO] 0.80
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] EXETER FUND FLEXIBLE YIELD SERIES 3
[NUMBER] 15
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1999
[PERIOD-START] NOV-01-1998
[PERIOD-END] APR-30-1999
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 1039094
[INVESTMENTS-AT-VALUE] 1093524
[RECEIVABLES] 21647
[ASSETS-OTHER] 60
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1115231
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 13858
[TOTAL-LIABILITIES] 13858
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1005466
[SHARES-COMMON-STOCK] 106131
[SHARES-COMMON-PRIOR] 158052
[ACCUMULATED-NII-CURRENT] 8097
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 33380
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 54430
[NET-ASSETS] 1101373
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 37842
[OTHER-INCOME] 0
[EXPENSES-NET] 5597
[NET-INVESTMENT-INCOME] 32245
[REALIZED-GAINS-CURRENT] 33379
[APPREC-INCREASE-CURRENT] (83463)
[NET-CHANGE-FROM-OPS] (17839)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 40663
[DISTRIBUTIONS-OF-GAINS] 40248
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 23588
[NUMBER-OF-SHARES-REDEEMED] 82906
[SHARES-REINVESTED] 7397
[NET-CHANGE-IN-ASSETS] (647298)
[ACCUMULATED-NII-PRIOR] 16515
[ACCUMULATED-GAINS-PRIOR] 40249
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 3292
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 16691
[AVERAGE-NET-ASSETS] 1328491
[PER-SHARE-NAV-BEGIN] 11.06
[PER-SHARE-NII] 0.258
[PER-SHARE-GAIN-APPREC] (0.403)
[PER-SHARE-DIVIDEND] 0.286
[PER-SHARE-DISTRIBUTIONS] 0.249
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.38
[EXPENSE-RATIO] 0.85
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] EXETER FUND BLENDED ASSET SERIES 1
[NUMBER] 11
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1999
[PERIOD-START] NOV-01-1998
[PERIOD-END] APR-30-1999
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 33347343
[INVESTMENTS-AT-VALUE] 34197098
[RECEIVABLES] 318814
[ASSETS-OTHER] 10226
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 34526138
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 241720
[TOTAL-LIABILITIES] 241720
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 32332582
[SHARES-COMMON-STOCK] 2968068
[SHARES-COMMON-PRIOR] 2785586
[ACCUMULATED-NII-CURRENT] 375610
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 726474
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 849752
[NET-ASSETS] 34284418
[DIVIDEND-INCOME] 109007
[INTEREST-INCOME] 594012
[OTHER-INCOME] 0
[EXPENSES-NET] 200271
[NET-INVESTMENT-INCOME] 502748
[REALIZED-GAINS-CURRENT] 808361
[APPREC-INCREASE-CURRENT] 1152386
[NET-CHANGE-FROM-OPS] 2463495
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 630063
[DISTRIBUTIONS-OF-GAINS] 1849031
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 520361
[NUMBER-OF-SHARES-REDEEMED] 563934
[SHARES-REINVESTED] 226055
[NET-CHANGE-IN-ASSETS] 1993201
[ACCUMULATED-NII-PRIOR] 502925
[ACCUMULATED-GAINS-PRIOR] 1767144
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 167766
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 200271
[AVERAGE-NET-ASSETS] 33831351
[PER-SHARE-NAV-BEGIN] 11.59
[PER-SHARE-NII] 0.170
[PER-SHARE-GAIN-APPREC] 0.670
[PER-SHARE-DIVIDEND] 0.224
[PER-SHARE-DISTRIBUTIONS] 0.656
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.55
[EXPENSE-RATIO] 1.19
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] EXETER FUND BLENDED ASSET SERIES 2
[NUMBER] 12
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1999
[PERIOD-START] NOV-01-1998
[PERIOD-END] APR-30-1999
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 71192062
[INVESTMENTS-AT-VALUE] 73996049
[RECEIVABLES] 1852245
[ASSETS-OTHER] 72322
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 75920616
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 207753
[TOTAL-LIABILITIES] 207753
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 69766470
[SHARES-COMMON-STOCK] 5621125
[SHARES-COMMON-PRIOR] 5049271
[ACCUMULATED-NII-CURRENT] 645772
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 2496647
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 2803974
[NET-ASSETS] 75712863
[DIVIDEND-INCOME] 363988
[INTEREST-INCOME] 864588
[OTHER-INCOME] 0
[EXPENSES-NET] 391973
[NET-INVESTMENT-INCOME] 836603
[REALIZED-GAINS-CURRENT] 2731817
[APPREC-INCREASE-CURRENT] 6775560
[NET-CHANGE-FROM-OPS] 10343980
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 989517
[DISTRIBUTIONS-OF-GAINS] 4195323
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1227270
[NUMBER-OF-SHARES-REDEEMED] 1271788
[SHARES-REINVESTED] 430682
[NET-CHANGE-IN-ASSETS] 9739841
[ACCUMULATED-NII-PRIOR] 798686
[ACCUMULATED-GAINS-PRIOR] 3960153
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 345139
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 391973
[AVERAGE-NET-ASSETS] 69217832
[PER-SHARE-NAV-BEGIN] 12.60
[PER-SHARE-NII] 0.150
[PER-SHARE-GAIN-APPREC] 1.706
[PER-SHARE-DIVIDEND] 0.188
[PER-SHARE-DISTRIBUTIONS] 0.798
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 13.47
[EXPENSE-RATIO] 1.14
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] EXETER FUND DEFENSIVE SERIES
[NUMBER] 2
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1999
[PERIOD-START] NOV-01-1998
[PERIOD-END] APR-30-1999
[PERIOD-TYPE] 6-MOS
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[APPREC-INCREASE-CURRENT] (20994)
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[DISTRIBUTIONS-OF-INCOME] 135037
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[NUMBER-OF-SHARES-SOLD] 105958
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[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] EXETER FUND MAXIMUM HORIZON SERIES
[NUMBER] 5
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1999
[PERIOD-START] NOV-01-1998
[PERIOD-END] APR-30-1999
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 22722943
[INVESTMENTS-AT-VALUE] 24170432
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[OTHER-ITEMS-LIABILITIES] 38305
[TOTAL-LIABILITIES] 38305
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 22107470
[SHARES-COMMON-STOCK] 1702527
[SHARES-COMMON-PRIOR] 1546424
[ACCUMULATED-NII-CURRENT] (50213)
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[ACCUMULATED-NET-GAINS] 1067131
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1447485
[NET-ASSETS] 24571873
[DIVIDEND-INCOME] 145377
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[EXPENSES-NET] 124434
[NET-INVESTMENT-INCOME] 102828
[REALIZED-GAINS-CURRENT] 1095598
[APPREC-INCREASE-CURRENT] 3921681
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[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 260337
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[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 293586
[NUMBER-OF-SHARES-REDEEMED] 237004
[SHARES-REINVESTED] 99521
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[ACCUMULATED-NII-PRIOR] 107296
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[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] EXETER FUND TAX MANAGED SERIES
[NUMBER] 8
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1999
[PERIOD-START] NOV-01-1998
[PERIOD-END] APR-30-1999
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 800666
[INVESTMENTS-AT-VALUE] 1021898
[RECEIVABLES] 8964
[ASSETS-OTHER] 645
[OTHER-ITEMS-ASSETS] 0
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[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 13546
[TOTAL-LIABILITIES] 13546
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 809437
[SHARES-COMMON-STOCK] 58869
[SHARES-COMMON-PRIOR] 53364
[ACCUMULATED-NII-CURRENT] (429)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (12279)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 221232
[NET-ASSETS] 1017961
[DIVIDEND-INCOME] 5626
[INTEREST-INCOME] 1048
[OTHER-INCOME] 0
[EXPENSES-NET] 5090
[NET-INVESTMENT-INCOME] 1584
[REALIZED-GAINS-CURRENT] (8097)
[APPREC-INCREASE-CURRENT] 168759
[NET-CHANGE-FROM-OPS] 162246
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 7164
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[NUMBER-OF-SHARES-SOLD] 18673
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[NET-CHANGE-IN-ASSETS] 246215
[ACCUMULATED-NII-PRIOR] 5151
[ACCUMULATED-GAINS-PRIOR] (880)
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